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A company's profit was $600,000 in 1980. What was its profit in 1981?

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A company's profit was $600,000 in 1980. What was its profit in 1981? [#permalink]

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New post 15 Jan 2018, 11:46
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E

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  45% (medium)

Question Stats:

63% (01:23) correct 37% (00:42) wrong based on 51 sessions

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A company's profit was $600,000 in 1980. What was its profit in 1981?

(1) There was a 20 percent increase in income in 1981.
(2) There was a 25 percent increase in costs in 1981

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Re: A company's profit was $600,000 in 1980. What was its profit in 1981? [#permalink]

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New post 15 Jan 2018, 16:16
Profit = Income - cost = 600,000 in 1980

Find profit in 1981

[1] : 20% increase in Income - does not say anything about cost : NS
[2] : 25% increase in cost - does not say anything about Income : NS

Combining both as well will not give the answer as the increase is not constant.

Had the increase in Income and cost been the same - we could say that profit remains the same but here we have different percentage of increases hence E
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Re: A company's profit was $600,000 in 1980. What was its profit in 1981? [#permalink]

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New post 15 Jan 2018, 19:14
SajjadAhmad wrote:
A company's profit was $600,000 in 1980. What was its profit in 1981?

(1) There was a 20 percent increase in income in 1981.
(2) There was a 25 percent increase in costs in 1981


It should be E

1- Profit = Revenue - Costs and 1 doesn't give us enough information to calculate Profit.

2- We know costs increased by 25% but we do not know Revenues or original cost.

1+2 Even when combined, we do not have exact numbers to work with.

For example, if original revenue was 1000000 and cost was 400000 (profit of 600000), increased income and costs would be 1200000 million and 500000, leading to a profit of 700000.
However, if 1980 revenue and costs were 2000000 and 1400000 respectively (profit of 600000), increased revenues and costs would be 2400000 and 1750000. Profit in this case would be 625000.
Since we cannot come up with a single number, our answer is E.
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Re: A company's profit was $600,000 in 1980. What was its profit in 1981?   [#permalink] 15 Jan 2018, 19:14
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