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# In 2003, the Making Hits Record Company spent 40% of its total budget

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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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31 Aug 2011, 14:14
OptimusPrimea1 wrote:
Correct me if am wrong..

As far as D goes, aren't we assuming(since it is not categorically mentioned) that SFR will be spending remaining 20% in overheads only and nothing else. Would that be a far-fetched assumption in this case?What if they are spending the 20% in say R&D(Just say).In that case the comparison between SFR and MRH with respect to overheads wont hold true. Let me know..

In this case:
SFR spent 0% of its budget in overhead costs.
We know, MRH spent 30% of its budget in overhead costs.

Extreme case:
SFR spent 20% of its budget in overhead costs.
We know, MRH spent 30% of its budget in overhead costs.

D says:
MRH spent a larger % of ITS budget on overhead costs than did the Song Factory.

D will be true in any case, without any assumption.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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01 Sep 2011, 14:34
1
D is the only missing factor: overhead costs. so D
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Dec 2011, 01:17
This one is a direct D. Arrange the costs as follows:

Name Of Company-------------Production Costs-----Marketing Costs-----Overhead Costs-----Number of Copies Sold

Making Hits Record Company----40-------------------------30----------------------30----------------------800,000
Song Factory Record Company---20-------------------------60----------------------20----------------------1,600,000

All the costs are expressed in percentage (%).

Thus, according to the overhead costs for each of the companies, we can see that Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. That is exactly what D says. Simple arithmetic and data arrangement help us solve this problem quickly too.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Dec 2011, 01:38
D for me also
A ) this talks about amount, but we have all info in %age
B ) cant be concluded as again we have all information in %age
C ) cant be concluded as we don’t have information on selling price.
D ) Yes as it’s stating the obvious 30 % versus 20% overhead.
E ) possible but again to much assumption we need to do
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Dec 2011, 21:50
This one is a direct D. Arrange the costs as follows:

Name Of Company-------------Production Costs-----Marketing Costs-----Overhead Costs-----Number of Copies Sold

Making Hits Record Company----40-------------------------30----------------------30----------------------800,000
Song Factory Record Company---20-------------------------60----------------------20----------------------1,600,000

All the costs are expressed in percentage (%).

Thus, according to the overhead costs for each of the companies, we can see that Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. That is exactly what D says. Simple arithmetic and data arrangement help us solve this problem quickly too.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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10 Jan 2012, 07:19
How can we assume that the cost grouping of the 2 companies are the same, i.e. that Song Factory Company spent 20% of its budget on overhead costs? It is nowhere said so and one has to assume it. For example, it could easily be that Song F.C spent 10% of its budget on overhead and another 10% on sales agents that the other company didn´t have.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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21 Jan 2012, 02:41
1
siddharthmuzumdar wrote:
This one is a direct D. Arrange the costs as follows:

Name Of Company-------------Production Costs-----Marketing Costs-----Overhead Costs-----Number of Copies Sold

Making Hits Record Company----40-------------------------30----------------------30----------------------800,000
Song Factory Record Company---20-------------------------60----------------------20----------------------1,600,000

All the costs are expressed in percentage (%).

Thus, according to the overhead costs for each of the companies, we can see that Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. That is exactly what D says. Simple arithmetic and data arrangement help us solve this problem quickly too.

But why are we assuming that the Total budget of Making Hits = Total budget of Song factory?
eg. Total budget of Making Hits = 100 , 30% of 100 --> 30
Total budget of Song factory= 200 , 20% of 200 --> 40
Then how come D is the ans?
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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21 Jan 2012, 04:13
D for me.
A) we can't prove this from the infromation given.

b) we can't trust percentages. if song factory's budget is more than Making hit's, then the \$ amount (represented by 20%) is more than the \$ amount spent by making hit (40%)

C)higher numbers doesn't mean higher revenue. making hit could have sold 800,000 \$50 a copy, and song factory could have sold its 1,600,000 copies for \$5 a copy.

D)true, comparing percentages with percentages

E) again, we can't compare numbers with percentages

hope this helps
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Jan 2012, 05:45
1
1
Let X and Y be the budgets of MHRC and SFRC respectively.
MHRCo. spent 40% of X ----- production of ten albums
30% of X ----- marketing
20% of X ----- Overhead costs
Sold 800,000 copies

SFRCo. spent 20% of Y ----- production of 10 albums
60% of Y ----- marketing
80% of Y ----- Overhead Costs
Sold 1,600,000 copies

Assuming each company met its budget, which of the following conclusions is best supported by the information given above? Hence, we should not assume anything other than what is mentioned in the stimulus.

(A) The amount of money spent on marketing is directly related to the number of copies sold. We don't know X, Y. So we can't say anything about the amount of money spent.
(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory. Same argument here too. We don't know X and Y.
(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits. We don't know what the selling prices were, so we cannot conclude anything from this statement.
(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. We know that MHRC spent 30% of X on OC and that SFRC spent 20% of Y on OC. True!
(E) The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory
spent a higher percentage of its budget on the marketing of its albums. Again, we don't know X and Y
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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31 Jan 2012, 08:43
I go with D too. One of the important concept to be noted is the difference between the absolute amount and the percentage.There is no additional data given for us to confirm surely that an increase in the sales is a result of the increase in the spending of marketing .
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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25 Mar 2012, 06:46
1
1
rait_m wrote:
How can we assume that the cost grouping of the 2 companies are the same, i.e. that Song Factory Company spent 20% of its budget on overhead costs? It is nowhere said so and one has to assume it. For example, it could easily be that Song F.C spent 10% of its budget on overhead and another 10% on sales agents that the other company didn´t have.

Hi,
In any case, Making Hits spent 30% of its budget on Overhead costs..

Song Factory's Production + Marketing = 80%
Even if there are more divisions in the company OverHead costs will be less than 30% only..

I hove this clarifies..

Regards
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Mar 2012, 18:28
+1 D

Remember that only we have percentages! We don't know how much money exactly spent each company.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Mar 2012, 22:17
This issue is number and statistic problem. Easily, we can eliminate all choice except choice D.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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26 Mar 2012, 22:31
+1 D

Intially went for B but then picked D as percentages were mentioned & not absolute amounts as in B.

Took time deconstructing the question stem
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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29 Oct 2012, 05:43
Mega2010 wrote:
In 2003, the Making Hits Record Company spent 40% of its total budget on the production of ten albums, 30% of its budget on the marketing of these albums, and the remainder of its budget on overhead costs. In the same year, the Song Factory Record Company spent 20% of its total budget on the production of 10 albums and 60% of its budget on the marketing of these albums. Making Hits sold a total of 800,000 copies of the ten records it produced in 2003, while the Song Factory sold a total of 1,600,000 copies of the ten records it produced in 2003.

Assuming each company met its budget, which of the following conclusions is best supported by the information given above?

(A) The amount of money spent on marketing is directly related to the number of copies sold.
(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory.
(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.
(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory.
(E) The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory
spent a higher percentage of its budget on the marketing of its albums.

I got D found OE, so posting it.

When drawing a conclusion, we must remember not to conclude too much; i.e.,
do not make unwarranted assumptions. In this case, we are looking for the
conclusion that must be true based only on the information given in the passage
(A) While we are given information about the percentage of the total budgets
spent on marketing, we have no information about the actual amount of money
either company spent on marketing.
(B) While we are given information about the percentage of the total budgets
spent on production, we have no information about the actual amount of money
either company spent on production.
(C) Because we have no information on the sale price per copy for either
company, we cannot make any conclusions about the revenue generated by
either company. It’s very possible that Making Hits sold its copies at twice the
price of the Song Factory copies, in which case the revenues for the two
companies would be the same.
(D) CORRECT. Since Making Hits spent 40% of its budget on production, 30% on
marketing, and the rest on overhead, we can conclude that Making Hits spent
30% of its budget on overhead. Since the Song Factory spent 20% of its budget
on production and 60% on marketing, and met its budget, it could not have
spent more than 20% on overhead. Therefore, Making Hits spent a higher
percentage of its budget on overhead than did the Song Factory.
(E) A valid conclusion must be true. While it is possible, and perhaps even likely,
that the percentage of the budget spent on marketing was a driver of sales, this
is not necessarily true; there are many other factors that could have affected
sales. For example, it is possible that the Song Factory sold more copies of its 10
albums because the music was better than the music produced at Making Hits,
and not because the Song Factory spent a higher percentage on marketing.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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16 Oct 2013, 05:41
VerbalBot wrote:
Hello from the GMAT Club VerbalBot!

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).

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I choose E and got it wrong, well after reading the discussion, in which every one has marked D as choice, I want to understand why E is wrong. The choice E states that "The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory spent a higher percentage of its budget on the marketing of its albums."

The question is asking on which of the conclusions is best supported by the information given above. Now since the question is asking a conclusion, how can answer be D "In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory" it does not make any sense, whereas Choice E states the right conclusion.

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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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16 Oct 2013, 09:54
VerbalBot wrote:
Hello from the GMAT Club VerbalBot!

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.

I choose E and got it wrong, well after reading the discussion, in which every one has marked D as choice, I want to understand why E is wrong. The choice E states that "The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory spent a higher percentage of its budget on the marketing of its albums."

The question is asking on which of the conclusions is best supported by the information given above. Now since the question is asking a conclusion, how can answer be D "In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory" it does not make any sense, whereas Choice E states the right conclusion.

D is correct because that is the only one that can be arrived at and is implied in the argument.

E is wrong because you are assuming that more percentage spending on marketing led to higher sales and this being a conclusion question, you are not allowed to make any such assumption. Other assumption could be better song tracks led to higher sales, but these are assumptions and not conclusion.

And btw D makes complete sense,as mathematically speaking, It is a 70:80 ratio b/w the companies and so making hit records company did spend a larger percentage on overhead cost.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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16 Oct 2013, 23:13
• The amount of money spent on marketing is directly related to the number of copies sold. Incorrect. talks about amount but we only know percentage spent.
• Making Hits spent more money on the production of its albums in 2003 than did the Song Factory. Incorrect. Again we don't exactly how much money they spent.
• Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.Incorrect. We don't know what the selling price is.
• In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. Correct. Seems correct as this supports the conclusion.
• The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory spent a higher percentage of its budget on the marketing of its albums. Incorrect. Out of scope.

I was stuck between D and E. But then D won.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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05 Nov 2013, 15:29
This question REALLY bothers me. You don't know if the company had some other expense that it was spending on, so you can't say it all went to overhead. D is a pretty weak OA if you ask me.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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31 Jul 2014, 23:21
I will go for D. 30% on overhead for Making HIts and 20% ( assumed) on overhead for Song Factory
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget &nbs [#permalink] 31 Jul 2014, 23:21

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