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Bunuel
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A company's profit was $600,000 in 1980. What was its profit in 1981? 10 Aug 2022, 09:30
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

35% (medium)

Question Stats:

62% (01:10) correct 38% (00:38) wrong based on 61 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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E
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samarth1222
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A company's profit was $600,000 in 1980. What was its profit in 1981? 19 Aug 2022, 05:44
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Hi,
can someone please explain y option E is the correct answer?
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gladysel
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A company's profit was $600,000 in 1980. What was its profit in 1981? 19 Aug 2022, 07:58
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They only give detail about the increment but not the absolute value, hence we cant calculate the profit

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samarth1222
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A company's profit was $600,000 in 1980. What was its profit in 1981? 19 Aug 2022, 09:03
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Gladys
They only give detail about the increment but not the absolute value, hence we can't calculate the profit

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Hi,
Thanks for the explanation but with the info given in both the statements we can calculate the values and will be able to determine the final profit. Also, what do you mean by absolute value?
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A company's profit was $600,000 in 1980. What was its profit in 1981? 19 Aug 2022, 09:43
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From the statement we can only get profit 600k

In which it can come from :
(a) income 700k and cost 100k
(b) income 900k and cost 300k

Based on the statement
(1) and (2)

For scenario (a) profit will be
Income (700k x 1.2 = 840k)
Cost (100k x 1.25 = 125k)
Profit : 715k

For scenario (b) profit will be
Income (900k x 1.2 = 1080k)
Cost (300k x 1.25 = 375k)
Profit : 705k

Hence it is insufficient

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A company's profit was $600,000 in 1980. What was its profit in 1981? 19 Aug 2022, 10:42
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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

Profit = Income/Revenue - Cost

St1 gives increase in Income - no info on cost in 1981

St 2 gives increase in cost but no info on income in 1981

Combined - 1980 : Profit ($600K) = Income (I) - Cost (C)
1981: ? = 1.2I - 1.25C
but we don't know absolute values of I and C

So Not sufficient
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Bunuel
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