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Last year, a certain company began manufacturing product X a [#permalink]
14 Dec 2012, 07:13

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B

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Difficulty:

95% (hard)

Question Stats:

42% (03:16) correct
58% (02:16) wrong based on 383 sessions

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

(1) The company's total revenue from the sale of product X last year was greater than $110,000. (2) For each unit of product X sold last year, the company's revenue was $5.

Re: Last year, a certain company began manufacturing product X a [#permalink]
14 Dec 2012, 07:20

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Expert's post

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Re: Last year, a certain company began manufacturing product X a [#permalink]
16 Jul 2013, 18:35

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Bunuel wrote:

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Answer: B.

I understand how you came up with R-(100,000+0.05R)>0 but how did you go about creating the equation R>2,000,000/19=~105,000.

Re: Last year, a certain company began manufacturing product X a [#permalink]
16 Jul 2013, 22:04

1

This post received KUDOS

Expert's post

hfbamafan wrote:

Bunuel wrote:

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Answer: B.

I understand how you came up with R-(100,000+0.05R)>0 but how did you go about creating the equation R>2,000,000/19=~105,000.

Re: Last year, a certain company began manufacturing product X a [#permalink]
17 Jul 2013, 12:39

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Statement 1: Top line revenue numbers only. Doesn't tell us anything about unit costs or information helping us to figure out how many units need to be sold. Not sufficient.

Statement 2: Assume that they sold 21000 units with $5 revenue per unit. This leaves us with $105 000 total revenue. The expenses would then be $100 000 + 5% of $105 000 = $105 250. This would lead to a loss not a profit so the company MUST have sold more than 21000 units to be profitable.

Re: Last year, a certain company began manufacturing product X a [#permalink]
18 May 2014, 09:47

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Statement 1: The company's total revenue from the sale of product X last year was greater than $110,000. No way to determine the number of units sold. INSUFFICIENT.

Statement 2: For each unit of product X sold last year, the company's revenue was $5. Plug in the THRESHOLD of 21,000 units: Total revenue = 5(21,000) = 105,000. Total expenses = 100,000 + .05(105,000) = 105,250. Not possible, since the company must make a profit. Test a GREATER number of units: 100,000. Total revenue = 5(100,000) = 500,000. Total expenses = 100,000 + .05(500,000) = 125,000. Here, the company makes a profit. Thus, to make a profit, the company must sell MORE than 21,000 units. SUFFICIENT.

The correct answer is B.

gmatclubot

Re: Last year, a certain company began manufacturing product X a
[#permalink]
18 May 2014, 09:47