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22 Jul 2010, 11:55
4
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Question Stats:

59% (01:06) correct 41% (01:02) wrong based on 510 sessions

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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
[Reveal] Spoiler: OA

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]

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22 Jul 2010, 12:04
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Expert's post
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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.

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]

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22 Jul 2010, 12:05
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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

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]

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22 Jul 2010, 12:05
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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

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]

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22 Jul 2010, 12:53
2
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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! Kudos [?]: 21 [2], given: 9 Intern Joined: 03 Jun 2010 Posts: 16 Kudos [?]: 32 [0], given: 0 Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 23 Jul 2010, 06:28 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?

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]

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23 Jul 2010, 06:57
1
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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! Kudos [?]: 21 [1], given: 9 Math Forum Moderator Joined: 20 Dec 2010 Posts: 1965 Kudos [?]: 2094 [0], given: 376 Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 19 Feb 2011, 14:59 1 This post was BOOKMARKED 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" _________________ Kudos [?]: 2094 [0], given: 376 Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 7738 Kudos [?]: 17817 [3], given: 235 Location: Pune, India Re: Cost/Profit Problem - is my explanation correct? [#permalink] ### Show Tags 19 Feb 2011, 20:27 3 This post received KUDOS Expert's post 2 This post was BOOKMARKED 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.

>>> Was the company's profit greater than $150,000? Was profit > 150,000? >>> (1) The company's total cost was three times its cost for materials. labor cost + material cost = 3 * material cost labor cost = 2* material cost So now we know that 500,000 is divided into 3 parts - 2*material costs (labor), material costs and profit. But no idea what these costs and profit are. Not sufficient. >>> (2) The company's profit was greater than its cost for labor Profit > labor cost but no idea how much labor cost or material cost was. Not sufficient. Together, Profit > 2 material cost so even if it was greater than 2*material cost by a very very small amount, 500,000 would have been split into 3 parts: 2*material cost (labor), material cost and 2*material cost (profit) So 2*material cost would be at least 200,000. Hence profit is at least 200,000. Sufficient. Answer (C). _________________ Karishma Veritas Prep | GMAT Instructor My Blog Get started with Veritas Prep GMAT On Demand for$199

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27 Dec 2011, 14:07
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when you combine
TC (total cost)= 3m (material)
TC= L (labor) + m = 3m so L=2M

500-TC>2m (aka L)
500>5m
m<100

500 - less then 300= greater then 200k

C

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10 Jan 2012, 15:01
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Rephrase: 500K - [L+M] >= 150K
L+M <= 350K?

1. L+M = 3M => L = 2M. No info on M or L values, insuff.
2. L < 150K. M=? insuff

Together, L<150K, which means M<75K, which implies that the labor cost is 3M<3x75K=225K. Obviously, this means that profit > 150K. Suff.
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Re: A construction company was paid a total of $500,000 for a [#permalink] ### Show Tags 23 Feb 2014, 23:50 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

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04 Jun 2015, 04:46
Mo2men wrote:
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?

From (1) we don't know whether m<117. The question becomes "IS m<117".
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A construction company was paid a total of $500,000 for a [#permalink] ### Show Tags 18 Jun 2016, 17:23 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. Answer is C. Kudos [?]: 1 [0], given: 0 Intern Joined: 26 May 2014 Posts: 43 Kudos [?]: 60 [0], given: 17 Location: India Concentration: General Management, Technology WE: Information Technology (Computer Software) A construction company was paid a total of$500,000 for a [#permalink]

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26 Oct 2016, 11:20
Converting the question into equations is the key to solving this question under two mins.

What does the question stem say -> Cost (C) = Labour ( L ) + Material ( M )

Cost = 500 ( dividing by 1000, makes the calculations appear less daunting )

Is Profit > 150 ?

What is profit ? -> Money Earned - Money Spent

Money Earned is -> 500

So Profit ( P) = 500 - C

Now, Rephrasing the question stem,
Is 500 - C > 150
which means, Is C < 350 ?

Now, lets look at both the options.

A) C=3M

No numerical given, so there is no way to ascertain the answer to our main question.

B) Profit is > Cost of Labour -- Which in mathematical terms, means the following

500 - C > L

now as we already know that C= L + M, L= C -M

Substituting,

500 -C > C - M ,

500 > 2C - M ( Again no numerical value available to prove C< 350 )

Now , Lets combine A and B

500 >2C - M and C= 3M,

Lets get everything in terms of C as our main question is in terms of C.

500 > 2C - C/3 ,

This gives us -- > C < 300 , which is sufficient to answer our main question , Is C< 350 .

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Re: A construction company was paid a total of $500,000 for a [#permalink] ### Show Tags 30 Oct 2017, 11:35 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. _________________ Kudos [?]: 283 [0], given: 0 Re: A construction company was paid a total of$500,000 for a   [#permalink] 30 Oct 2017, 11:35
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