DS: MGMAT (not happy with OA)

Question

Please explain your answer choice.

Vlad77 · Answer

I think it is B

Ñp=Cf+Cv

(A) Cp=1,13 Cf+0,95Cv =>insufficient
(B) Cp=6Cv => Cp(January)=6Cv*0,95=> the answer is "decreases by 5%"=>sufficient

financeguy · Answer

I agree but OA is C. I don't understand when statement B alone is enough, why we need to even consider C.

Thanks

ywilfred · Answer

total cost = fixed cost + variable cost
t = f + v

St1:
new f = 1.13f
new v = 0.95v
new t = 1.13f + 0.95v

difference = 0.13f - 0.05v

% difference = (0.13f - 0.05v)/(f+v)

Insufficient.

St2:
f = 5v
v changed by 5%, so f = 5(0.95v) = 4.75v. Can calculate difference and hence % change. Sufficient.

Ans B

GMATBLACKBELT · Answer

I had this problem not to long ago on my MGMAT CAT. CAT 3 right?

TC=total costs
FC=fixed costs
VC=variable costs

TC=FC+VC

so from the statement we know that the new VC is .95V

So TC=FC+.95VC

TC=1.13FC+.95VC. We don't know the values of VC or FC or we don't have a relation of FC to VC.


Ex/ FC= 1000. VC=100, So 1113+95= 1208. 1208/1000= 1.208 So it increased by 20.8%.

If FC=500 and VC=100 then 1.13(500)+95 =660/600=1.1 So it increased by 10%. 

Insuff.

S2: Relates FC to VC but we know nothing about the changes in FC. Insuff.

Essentially 5VC=FC.

Together. 1.13(5VC)+.95(VC) = 6.6VC TC=6.6VC Originally it was 

TC=5VC+VC so we have 6.6VC/6VC =1.1 So TC increased by 10%.


Ans C.

excelgmat · Answer

Consider the bold part.

St. 2--> Cp= F + V

F = 5V
Now V= 0.95V

--> Now Cp= 5v+ 0.95V=5.95V

---> % change = 6v-5.95v /6v
---> 0.5/6 x 100=8.3 %

thus B is sufficient.

GMATBLACKBELT · Answer

Consider the bold part.

St. 2--> Cp= F + V

F = 5V
Now V= 0.95V

--> Now Cp= 5v+ 0.95V=5.95V

---> % change = 6v-5.95v /6v
---> 0.5/6 x 100=8.3 %

thus B is sufficient. 

Ya ur right. Looking back at my notes for this CAT. I chose B as well and did the exact same calculations you did.

GMATBLACKBELT · Answer

Ima post this on the MGMAT forums and see what the teachers say bout it. that might of boosted my last CAT score

coldweather999 · Answer

The answer "C" is correct. We can't just assume that the Fixed cost, that was 5V "BEFORE THE CHANGES IN JAN", is still 5 times the new Variable cost AFTER THE CHANGES. While variable cost was changing during the period of change, fixed cost could have also changed ! :-)

mastergmat1 · Answer

the OA has to be C

You cannot calculate the percent change of the price without know if the fixed costs went up or stayed the same.

The fact that the choiced include F went up with 13 % in jan means you have to include that in your calculations,

ashkrs · Answer

I dont know if I am understanding the question wrong . But I get C.
Here's how 

From stem TC = FC + VC 
Let TC be 100 so => FC + VC = 100 (before january)
Also in January VC(jan) = 95VC/100 

  From stmnt 1   

FC(jan) = 113FC/100
TC(jan) = 113FC/100 + 95VC/100 

Can we know the percent chnage in total cost . No we cant . 
Insufficient

  From Stmnt 2   

Before January FC = 5VC
that gives the values of FC and VC using the formula from stem .
But do we know what the new TC(jan) is ? No because thats available in stmnt 1.
So Stmnt 2 is insufficient too .

  Combining both  

To know what is the new TC(jan) we have to substitute the values which we got for FC and VC and get the new TC(jan) . 
Once we get the TC(jan) we can know the percent change .

  Not required but I am solving it  

FC + VC = 100 ( before jan )
FC = 5VC
 So 6VC = 100 => VC = 100/6 => FC - 500/6

TC(jan) = 113FC/100 + 95VC/100 
 = 660/6 = 110

Change in TC = 110 -100 = 10%

Fistail · Answer

i do not see much complecation:

TC = FC +VC
New VC in Jan = 0.95 (Old VC)

By what % did the TC of x change in Jan?

1: FC in Jan = 1.13 (Old FC)..... nsf
2: Old FC = 5 (old VC)..nsf

1 and 2: 
Old TC = FC + VC
Old TC = 5 (VC) + VC
Old TC = 6 (VC)

New TC = New VC + New FC
New TC = 0.95 Old VC + 1.13 (Old FC)
New TC = 0.95 Old VC + 1.13 (5VC)
New TC = 0.95 Old VC + 5.65 Old VC
New TC = 6.60 VC

Change = (New TC - Old TC)/Old TC
Change = (6.60 VC - 6.00 VC) / (6.00 VC)
Change = (0.60 VC) / (6.00 VC)
Change = 10%

SO C.

GK_Gmat · Answer

Stat 1 is insuff. Try FC=100 VC=100 first then try FC=100 VC=120. We get 2 different answers.

Stat 2 is insufficient because it says nothing about the fixed cost. We cannot assume that the FC remains the same. We need info. about both the FC and the VC to solve. 

Answer is C.

DS: MGMAT (not happy with OA)

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