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# The total cost of producing item X is equal to the sum of it

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Senior Manager
Joined: 10 Nov 2010
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Location: India
Concentration: Strategy, Operations
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The total cost of producing item X is equal to the sum of it [#permalink]  03 Oct 2011, 06:26
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56% (01:56) correct 44% (01:19) wrong based on 185 sessions
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

(1) The overhead cost of producing item X increased by 13% in January.

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

[Reveal] Spoiler:
Guys i marked B but its wrong.

Pls discuss
[Reveal] Spoiler: OA

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The proof of understanding is the ability to explain it.

Manager
Joined: 31 May 2011
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Kudos [?]: 38 [1] , given: 4

Re: Total Cost of Producing item X [#permalink]  03 Oct 2011, 06:51
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Total Cost = T
Production Cost = P

from the question we have: T = P + Q
Statement 1: T1 = .95P +1.13Q
change = T - T1 => 0.05P -0.13Q
hence as we have 2 unknown calculation of % increase/decrease not possible
insufficient.
Statement 2:
O = 5P
therefore T = P + O => T = P+5P
decrease in production cost is known but increase or decrease in overhead is still unknown. We cannot apply the decrease in production cost to the increase/decrease of overhead cost.

hence the actual change will remain unknown. Hence insufficient

Statement 1&2 together. We have the relation ship between P and O and also there individual increase/decrease %
Hence sufficient
Senior Manager
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Re: Total Cost of Producing item X [#permalink]  04 Oct 2011, 19:17
A is insufficient because it doesn't tell us how the overhead and production costs relate

B is insufficient because it doesn't tell us how much the overhead costs changed

The answer is C, because with A and B together we know by what percentage both the overhead and production costs increased, as well as how they are proportional to each other.
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Re: Total Cost of Producing item X [#permalink]  05 Oct 2011, 02:15
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GMATD11 wrote:
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

(1) The overhead cost of producing item X increased by 13% in January.

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Guys i marked B but its wrong.

Pls discuss

The reason 'B' is not the answer is that you are not allowed to 'assume' anything in DS questions.
You know that production cost increased by 5%. Using statement 2, you also see that production cost is a sixth of the total cost. So you assume that you know the change in the total cost. But remember, you are assuming here that overhead cost hasn't changed. Since you do not know whether overhead cost is the same or has changed, you cannot say anything about the decrease/increase in the overall cost. Even if you overlooked this, statement 1 should have reminded you that overhead cost could have changed too. Hence the answer has to be (c).
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Karishma
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Get started with Veritas Prep GMAT On Demand for $199 Veritas Prep Reviews Intern Joined: 05 Mar 2013 Posts: 45 Location: India Concentration: Entrepreneurship, Marketing GMAT Date: 06-05-2013 GPA: 3.2 Followers: 1 Kudos [?]: 31 [6] , given: 14 Re: The total cost of producing item X [#permalink] 15 May 2013, 00:28 6 This post received KUDOS WarriorGmat wrote: The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month? (1) The overhead cost of producing item X increased by 13% in January. (2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X. T = Total costs O = Overhead costs P = production costs given:- P changes to 0.95P To find:- T changes to what?? AD/BCE statement 1:- O changes to 1.13O so T change can be calculated by $$((P+O) - (0.95P + 1.13O))/ (P+O)$$ which gives $$(0.95P + 1.13O)/ (P+O)$$ ---------- 1 we cannot calculate the value here. So A alone is not sufficient. AD out statement 2:- O is 5 times P . O = 5P We don't know what the changes in O are to calculate changes in T using B alone. So B is out. 1 and 2 combined we can substitute the value of O in the 1st equation. In the numerator and denominator we can cancel P therby we can get a numerical value. So C is the answer _________________ "Kudos" will help me a lot!!!!!!Please donate some!!! Completed Official Quant Review OG - Quant In Progress Official Verbal Review OG 13th ed MGMAT IR AWA Structure Yet to do 100 700+ SC questions MR Verbal MR Quant Verbal is a ghost. Cant find head and tail of it. Manager Status: *Lost and found* Joined: 25 Feb 2013 Posts: 123 Location: India Concentration: General Management, Technology GMAT 1: 640 Q42 V37 GPA: 3.5 WE: Web Development (Computer Software) Followers: 17 Kudos [?]: 84 [0], given: 14 Re: The total cost of producing item X [#permalink] 15 May 2013, 00:30 WarriorGmat wrote: The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month? (1) The overhead cost of producing item X increased by 13% in January. (2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X. The answer would be [C]. Let the total cost of Production be X = O + P where, O - Overhead Cost P - Production Cost In Jan, X1 = O1 + P1 = O1 + 95*P/100. Statement 1: Now currently the above equation has 2 variables which determine the value of X. Statement 1 offers the rate of increase of O in Jan. But in the end, no relation can be established between O and P to represent X in common terms. Hence, its insufficient. The equation at this stage can be represented as: X1 = 113*O/100 + 95*P/100, where X1 is the total cost of Product in Jan. Statement 2 establishes a relation between O and P i.e. O = 5P, individually the above is insufficient since, we are unsure as to what changes happened in the Overhead cost in Jan. But when we combine the two statements we can find the change in values in terms of the old values easily. Hence, both the statements are necessary. Please correct me if I am wrong Regards, Arpan _________________ Feed me some KUDOS! *always hungry* My Thread : Recommendation Letters Intern Joined: 05 Feb 2014 Posts: 48 Followers: 0 Kudos [?]: 8 [0], given: 49 Re: The total cost of producing item X is equal to the sum of it [#permalink] 21 Jun 2014, 02:46 VeritasPrepKarishma wrote: GMATD11 wrote: The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month? (1) The overhead cost of producing item X increased by 13% in January. (2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X. Guys i marked B but its wrong. Pls discuss The reason 'B' is not the answer is that you are not allowed to 'assume' anything in DS questions. You know that production cost increased by 5%. Using statement 2, you also see that production cost is a sixth of the total cost. So you assume that you know the change in the total cost. But remember, you are assuming here that overhead cost hasn't changed. Since you do not know whether overhead cost is the same or has changed, you cannot say anything about the decrease/increase in the overall cost. Even if you overlooked this, statement 1 should have reminded you that overhead cost could have changed too. Hence the answer has to be (c). Hi Karishma, Can you please explain why A can't be the answer. According to me, Total cost = OC + PC ------A Using 1st stat , TC = 1.13 OC + .95 PC ------- B We can now just substitute some value for OC and PC in A then modify the values to percent in B Then using A and B we can find the percent change since they are not asking the actual cost. Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 5735 Location: Pune, India Followers: 1444 Kudos [?]: 7571 [1] , given: 186 Re: The total cost of producing item X is equal to the sum of it [#permalink] 22 Jun 2014, 20:12 1 This post received KUDOS Expert's post gauravsoni wrote: VeritasPrepKarishma wrote: GMATD11 wrote: The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month? (1) The overhead cost of producing item X increased by 13% in January. (2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X. Guys i marked B but its wrong. Pls discuss The reason 'B' is not the answer is that you are not allowed to 'assume' anything in DS questions. You know that production cost increased by 5%. Using statement 2, you also see that production cost is a sixth of the total cost. So you assume that you know the change in the total cost. But remember, you are assuming here that overhead cost hasn't changed. Since you do not know whether overhead cost is the same or has changed, you cannot say anything about the decrease/increase in the overall cost. Even if you overlooked this, statement 1 should have reminded you that overhead cost could have changed too. Hence the answer has to be (c). Hi Karishma, Can you please explain why A can't be the answer. According to me, Total cost = OC + PC ------A Using 1st stat , TC = 1.13 OC + .95 PC ------- B We can now just substitute some value for OC and PC in A then modify the values to percent in B Then using A and B we can find the percent change since they are not asking the actual cost. Ok, let's continue and find the percent change in total cost. TC = OC + PC We don't know how much of total cost is OC and how much is PC. Let's assume that total cost is 200 and OC = 100, PC = 100 New TC = 1.13 OC + .95 PC New TC = 1.13*100 + .95*100 = 208 This is a 4% increase. Now let's assume that of the total cost of 200, OC = 50, PC = 150 New TC = 1.13*50 + .95*150 = 199 This is a 0.5% decrease. Note that the % change in total cost is dependent on how the total cost is divided between OC and PC. Since statement 1 alone doesn't tell us how it is divided, we don't know whether there is an increase/decrease in total cost and how much. _________________ Karishma Veritas Prep | GMAT Instructor My Blog Get started with Veritas Prep GMAT On Demand for$199

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Re: The total cost of producing item X is equal to the sum of it [#permalink]  12 Jul 2015, 07:18
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Re: The total cost of producing item X is equal to the sum of it   [#permalink] 12 Jul 2015, 07:18
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# The total cost of producing item X is equal to the sum of it

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