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Which of Company X and Company Y earned the greater gross [#permalink]
23 Jul 2012, 05:09

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E

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Question Stats:

72% (01:50) correct
28% (00:50) wrong based on 154 sessions

Which of Company X and Company Y earned the greater gross profit last year?

(1) Last year the expenses of Company X were 5/6 of the expenses of Company Y. (2) Last year the revenues of Company X were $6 million less than the revenues of Company Y.

Re: Which of Company X and Company Y earned the greater gross [#permalink]
23 Jul 2012, 06:15

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Individually both are Not Sufficient. So solving for together

Profit X = Revenue X - Expense X

Expense X = 6/5 Expense Y Revenue X = Revenue Y- 6

Hence Profit X = Revenue Y - 6 - 6/5 Expense Y Now Profit Y = Revenue Y - Expense Y

Here if 6 + 6/5 Expense Y = Expense Y, than the statement is false as profit becomes equal, and its the case if Expense Y =36. For other examples the statement is true, ex. like the one you took. Hence insufficient and E _________________

Re: Which of Company X and Company Y earned the greater gross [#permalink]
23 Jul 2012, 07:12

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Expert's post

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maybeam wrote:

Which of Company X and Company Y earned the greater gross profit last year?

(1) Last year the expenses of Company X were 5/6 of the expenses of Company Y. (2) Last year the revenues of Company X were $6 million less than the revenues of Company Y.

Quote:

what i did.

statement I & II independently insufficient.

Taking together,

let Y expenses be 6m X expenses= 5m

Let Y revenue= 12m X revenue= 12-6=6m

y profit= exp*R= 6*12=72m x profit= 5*6= 30 m

therefore, Y profit> X profit.

Both statement together suff.

Now my Q is why is it wrong?

Two reasons why your solution is wrong: 1. {Profit} = {Revenue} - {Expenses}, not {Profit} = {Revenue}*{Expenses}, as you've written. 2. One example is not enough to conclude that a statement is not sufficient.

Which of Company X and Company Y earned the greater gross profit last year?

Since {Profit} = {Revenue} - {Expenses}, then we are asked whether \(R_x-E_x>R_y-E_y\)?

(1) Last year the expenses of Company X were 5/6 of the expenses of Company Y --> \(E_x=\frac{5}{6}*E_y\). Not sufficient, as we know nothing about the revenues.

(2) Last year the revenues of Company X were $6 million less than the revenues of Company Y --> \(R_x=R_y-6,000,000\). Not sufficient, as we know nothing about the expenses.

(1)+(2) So, according to the above the question becomes whether \((R_y-6,000,000)-\frac{5}{6}*E_y>R_y-E_y\) or whether \(E_y>6*6,000,000\). We don't know that, hence even taken together the statements are not sufficient.

Re: Which of Company X and Company Y earned the greater gross [#permalink]
26 Jul 2012, 05:30

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it's a DS ;Let's keep it simple Revenue-Expenses=Profit (i)expenses of x =5/6 of Y WE STILL NEED REVENUE-insufficient (ii)revenue of x= $6mn less than y we don't know expenses-insufficient from (i) and (ii) both details are relative (to each other) not a standard figure, so (E) _________________

" Make more efforts " Press Kudos if you liked my post

Re: Which of Company X and Company Y earned the greater gross [#permalink]
18 Apr 2014, 02:11

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Which of Company X and Company Y earned the greater gross [#permalink]
10 May 2014, 11:01

From statement 1 and 2 , we have

P(x) = R(y) - 5/6*C(y) -6 P(y) = R(y) - C(y). At first sight it might seem for whatever value of C(y), P(y) would be greater. But for C(y) = 36, we get P(x)=P(y). Hence E is the answer

Re: Which of Company X and Company Y earned the greater gross [#permalink]
12 Sep 2014, 22:45

Done with table method, 1 and 2 alone insufficient On combining we know expenses of x is 5/6y if y is expenses. And Y's revenue - 6 million No data of y's revenue So E

Re: Which of Company X and Company Y earned the greater gross [#permalink]
08 Dec 2014, 15:03

Just want to provide a cautionary tale...

Had stmt 1 told us that expenses for r were equal to or greater than y, then both statements together would be sufficient. Seems simple enough, but if you get too concerned with trying to apply formulas, you really could waste a good amount of time.

gmatclubot

Re: Which of Company X and Company Y earned the greater gross
[#permalink]
08 Dec 2014, 15:03

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