GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 11 Dec 2018, 14:35

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

## Events & Promotions

###### Events & Promotions in December
PrevNext
SuMoTuWeThFrSa
2526272829301
2345678
9101112131415
16171819202122
23242526272829
303112345
Open Detailed Calendar
• ### Free GMAT Prep Hour

December 11, 2018

December 11, 2018

09:00 PM EST

10:00 PM EST

Strategies and techniques for approaching featured GMAT topics. December 11 at 9 PM EST.
• ### The winning strategy for 700+ on the GMAT

December 13, 2018

December 13, 2018

08:00 AM PST

09:00 AM PST

What people who reach the high 700's do differently? We're going to share insights, tips and strategies from data we collected on over 50,000 students who used examPAL.

### Show Tags

22 Jul 2010, 10:55
7
29
00:00

Difficulty:

75% (hard)

Question Stats:

57% (01:03) correct 43% (00:57) wrong based on 777 sessions

### HideShow timer Statistics

A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor
Math Expert
Joined: 02 Sep 2009
Posts: 51100
Re: Cost/Profit Problem - is my explanation correct?  [#permalink]

### Show Tags

22 Jul 2010, 11:04
21
20
asch13 wrote:
A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor

Given: $$c=l+m$$
Question is $$p=500-c>150$$ true?

(1) $$c=3m$$ --> is $$500-3m>150$$ true? --> is $$m<\frac{350}{3}\approx{117}$$ true? Not sufficient.

(2) $$500-(l+m)>l$$ --> $$500>2l+m$$. Not sufficient.

(1)+(2) Question became is $$m<\frac{350}{3}\approx{117}$$ true? From (1) $$c=l+m=3m$$ --> $$l=2m$$. From (2) $$500>2l+m=4m+m=5m$$ --> $$m<100$$. Sufficient.

_________________
##### General Discussion
Intern
Joined: 03 Jun 2010
Posts: 15
Re: Cost/Profit Problem - is my explanation correct?  [#permalink]

### Show Tags

22 Jul 2010, 11:05
4
Cost(C) = Labor(L) + Materials(M)
Profit(P) = 500,000-C
is 500,000 - C > 150,000?
is C < 350,000

(1) C = 3M
C = 3M = L + M, L = 2M

(2) P > L
Substitute 2M for L
P > 2M
multiply both sides by 3/2
(3/2)P > 3M
Substitute C for 3M
(3/2)P > C
plug 150,000 in for P
(3/2)(150,000) > C
225,000 > C

So, C < 350,000 and the answer is yes, so then (1) and (2) together are sufficient
Intern
Joined: 03 Jun 2010
Posts: 15
Re: Cost/Profit Problem - is my explanation correct?  [#permalink]

### Show Tags

22 Jul 2010, 11:05
1
Bunuel wrote:
asch13 wrote:
A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor

Given: $$c=l+m$$
Question is $$p=500-c>150$$ true?

(1) $$c=3m$$ --> is $$500-3m>150$$ true? --> is $$m<\frac{350}{3}\approx{117}$$ true? Not sufficient.

(2) $$500-(l+m)>l$$ --> $$500>2l+m$$. Not sufficient.

(1)+(2) Question became is $$m<\frac{350}{3}\approx{117}$$ true? From (1) $$c=l+m=3m$$ --> $$l=2m$$. From (2) $$500>2l+m=4m+m=5m$$ --> $$m<100$$. Sufficient.

wow, that was fast, I was just typing my explanation, but yours looks much simpler. thanks
Intern
Joined: 16 Jul 2010
Posts: 18
Re: Cost/Profit Problem - is my explanation correct?  [#permalink]

### Show Tags

22 Jul 2010, 11:53
2
My solution:

1) Total cost = 3M, Labor = 2M, NS

2) Profit >= Labor, NS

1) and 2) Profit >= 2M, therefore profit must be at least 2M/(2M+M+2M)*$500,000 = 2/5*$500,000, therefore profit >= $200,000. Sufficient. _________________ If you find my posts useful, please award me some Kudos! Intern Joined: 03 Jun 2010 Posts: 15 Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 23 Jul 2010, 05:28 dauntingmcgee wrote: My solution: 1) Total cost = 3M, Labor = 2M, NS 2) Profit >= Labor, NS 1) and 2) Profit >= 2M, therefore profit must be at least 2M/(2M+M+2M)*$500,000 = 2/5*$500,000, therefore profit >=$200,000. Sufficient.

Could you please explain why profit must be at least 2M/(2M+M+2M)*500,000?
Intern
Joined: 16 Jul 2010
Posts: 18
Re: Cost/Profit Problem - is my explanation correct?  [#permalink]

### Show Tags

23 Jul 2010, 05:57
1

Since from:

1) we know that Labor (L) = 2 * Materials (M), and
2) we know that Profit (P) >= L
1) and 2) combined show that P >= 2M

There are only three components of the $500,000: P, L and M, so P+L+M =$500,000. The minimum amount of P is the case that P = L = 2M. In order to find what fraction P is of P+L+M we simply take $$P/(P+M+L) = 2M/(2M+M+2M) = 2M/5M = 2/5$$. Now that we know what fraction of the $500,000 is P, we simply multiply 2/5 *$500,000 to get $200,000. Sufficient. _________________ If you find my posts useful, please award me some Kudos! Retired Moderator Joined: 20 Dec 2010 Posts: 1820 Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 19 Feb 2011, 13:59 1 1 Total budget = 500 Is profit > 150 Or is expenditure < 350 1) Total cost = Material+Labor T = M+L T = 3M 3M = M+L 2M = L Labor cost is twice that of material. If M=1, L=2; T=3. Expenditure < 350. Yes M=150; L=300; T=450; Expenditure > 350. No. Not sufficient. 2) Company's Profit P>L M=0; L=249; P=251. Expenditure <350. Yes M=399; L=1; P=100. Expenditure <350. No. Not sufficient. Combining 1 and 2; T=M+L=L/2+L T=(3/2)L P=500-T=500-(3/2)L P=500-(3/2)L P>L 500-(3/2)L>L 500>(5/2)L (5/2)L<500 L<200 Since M is half L. M should be <100 Even if we consider maximum of these; Total maximum expenditure = 200+100=300<350. Thus profit will always be >150. Ans: "C" _________________ Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 8659 Location: Pune, India Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 19 Feb 2011, 19:27 5 4 fluke wrote: Total budget = 500 Is profit > 150 Or is expenditure < 350 1) Total cost = Material+Labor T = M+L T = 3M 3M = M+L 2M = L Labor cost is twice that of material. If M=1, L=2; T=3. Expenditure < 350. Yes M=150; L=300; T=450; Actually, you may not want to use so many variables and then plug values. Chances of error are very high in this case. Preferably, stick to algebra or reason it out as follows: >>> A construction company was paid a total of$500,000 for a construction project. The company's only costs for the project were for labor and materials.

500,000 is divided into 3 parts - Labor costs, material costs and profit.

### Show Tags

23 Feb 2014, 22:50
Hi all. Bumping this topic because I didn't find an adequate answer explanation.

Here's mine:

Given :

Profit = 500,000 - TC

TC = L + M

St. 1: (N.S.)

TC = 3M
3M = L + M
2M = L

St. 2: (N.S.)

P > L , since L = 2M , Profit > 2M

Both Statements:

P = 500,000 - 3M [TC = 3M from st. 1]
2M = 500,000 - 3M [P > L , P > 2M ] . Substitute 2M into the profit formula, knowing that the Profit number must be greater than 2M.

solve for M: ... M = $100,000. Plug into profit formula : 2($100,000) = $500,000 - 3($100,000)

Profit > $200,000 Answer choice C. SVP Joined: 26 Mar 2013 Posts: 1910 A construction company was paid a total of$500,000 for a  [#permalink]

### Show Tags

04 Jun 2015, 03:39
Bunuel wrote:
asch13 wrote:
A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor

Given: $$c=l+m$$
Question is $$p=500-c>150$$ true?

(1) $$c=3m$$ --> is $$500-3m>150$$ true? --> is $$m<\frac{350}{3}\approx{117}$$ true? Not sufficient.

(2) $$500-(l+m)>l$$ --> $$500>2l+m$$. Not sufficient.

(1)+(2) Question became is $$m<\frac{350}{3}\approx{117}$$ true? From (1) $$c=l+m=3m$$ --> $$l=2m$$. From (2) $$500>2l+m=4m+m=5m$$ --> $$m<100$$. Sufficient.

Hi Bunuel,
In Statement 1 we concluded that m< 350/3= 116.66 So we can substitute the result in the equation 500-(3*116)=152>150. We can choose number lower than 116. Choose 115 and apply in the equation 500-(3*115)=155 > 150 any number lower than 350/3 will result in P>150. So Statement A should be Sufficient.

What is wrong in my work?
Math Expert
Joined: 02 Sep 2009
Posts: 51100

### Show Tags

18 Jun 2016, 16:23
1
Hi all. I’m not very good at mathy explanations (more of a verbal guy), but I got this question right first time in about 2 minutes. Here is my logic to it:

The question stem tells us that the company was paid $500k for the project, and states that only labor and material are the costs. It then asks if the company’s profit is greater than 150k. Another way of thinking of that is asking if the costs were greater than$350k. (Since $500k payment –$350k cost = $150k profit) Statement 1 tells us that the ratio of total cost to cost of material is 3 to 1. Because the question stem states the only other cost is labor, we know that the ratio of labor cost to material cost is 2:1. For every dollar of material there is 2 dollars of labor. Not sufficient on its own. Statement 2 tells us the company profit is greater than its cost of labor. An important part of that is that it means profit is indeed a positive number! Not sufficient on its own. With the statements combined we know that profit is greater than labor, and the ratio of labor to material is 2:1. The limit ends up being$200k profit, $200k labor, and$100k materials. The company’s actual costs have to be lower than this limit. Even the limit only has $300k of cost, which is much lower than$350k as asked in the question stem.

Intern
Joined: 26 May 2014
Posts: 40
Location: India
Concentration: General Management, Technology
WE: Information Technology (Computer Software)

### Show Tags

26 Nov 2018, 11:11
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).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________