A certain business spends 1/2 of its revenue on payroll, 1/4 on invent

Hi All,

This question can be solved by TESTing THE ANSWERS.

We're told that a business spends 1/2 of its revenue on payroll, 1/4 on inventory, 1/5 on healthcare and the REMAINING $200,000 is issued as dividends. We're asked for the business's TOTAL revenue?

Let's TEST Answer B: $3 million

1/2 of $3 million = $1.5 million
1/4 of $3 million = $0.75 million
1/5 of $3 million = $0.6 million
Total = $2.85 million, which leaves $150,000 for dividends. This is TOO LOW; there needs to be MORE revenue. Notice how $200,000 is exactly 1/3 greater than $150,000.... maybe we're looking for a total that is exactly 1/3 greater than $3 million.....

Let's TEST Answer C: $4 million

1/2 of $4 million = $2 million
1/4 of $4 million = $1 million
1/5 of $4 million = $0.8 million
Total = $3.8 million, which leaves $200,000 for dividends. This is an exact match for what we were told, so this MUST be the answer.

Final Answer:
GMAT assassins aren't born, they're made,
Rich

Converting into percentages, 1/2 is 50%, 1/4 is 25% and 1/5 is 20%
Adding the above, we get 95%. Also, it is given the remaining 5% is 200000$

Hence total is 100% = 200000*20 = $4 million(Option C)

Why is the OA E ? I think the answer should be C...

Yes, it's C. Edited the OA. Thank you.

the quickest way is to put everything in fractions, or even decimals..
0.5 - payroll
0.25 - inventory
0.2 - healthcare
total: 0.95

remaining, 0.05 of revenue is 200,000.
now... 0.1 would be 400,000
1 would be 4,000,000

no need of any complex operations...

We can let t = total revenue, and we can create the following equation:

(1/2)t + (1/4)t + (1/5)t + 200,000 = t

Multiplying the entire equation by 20, we have:

10t + 5t + 4t + 4,000,000 = 20t

4,000,000 = t

Answer: C