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

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

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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.

Originally posted by Mega2010 on 10 Oct 2009, 23:28.
Last edited by Bunuel on 03 Jan 2019, 13:37, edited 1 time in total.
Edited the question.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 11 Oct 2009, 02:31
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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.
( The deals with percentages so it is a very hard decision to take)
(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory.
(40% of its total budget may or may not be greater than 20% of its total budget)
(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.
( Cannot be said. Number of copies is higher does not indicate the total revenues are greater)
(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory.
( Nothing is told about Song Factory overhead cost)
(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.( This seems good to me)
Reasonable conclusion to take. Will go for E.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 11 Oct 2009, 03:21
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I will go with D on this one.

Even if nothing is mentioned specifically about the overhead costs of SFRC, we get a clear hint that the overhead costs can be max 20% ( in case there are no other costs involved ) or 0% ( in case other costs are involved ). The budget cant overshoot 100%, so D makes sense.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 08 Oct 2010, 09:40
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This is one of those CR problems that's a quant problem in disguise. What they're really asking you to do is crunch the numbers and realize that Making Hits spent 30% of its budget on overhead, whereas the maximum possible that Song Factory could have spent on overhead was 20% of its budget. Because we don't know the actual numbers that those percentages are taken of, we can't compare amounts of money, eliminating A) and B). We don't know the selling price of the albums, eliminating C). And E) suggests a cause and effect relationship that goes to far in reaching for a conclusion. The correct answer, D), demonstrates what is so often true on inference problems: a conservative answer is a better answer.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 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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New post 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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New post 21 Jan 2012, 02:41
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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? :cry:
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 26 Jan 2012, 05:45
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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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New post 25 Mar 2012, 06:46
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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..

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

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New post 29 Oct 2012, 05:43
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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.



OFFICIAL EXPLANATION:



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 without requiring any additional assumptions.

(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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New post 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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New post 31 Jul 2014, 23:24
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AccipiterQ wrote:
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.


I will go for D. You know for sure that Making Hits spent 30% of its total budget on overhead. For Songs Factory, since it's already used 80% on marketing and production, the rest is 20%. So the maximum amount can be spent on overhead is 20% ( it could be less than that if, as you said, the company had some other expense). Then you still can conclude that Making Hits spent larger percentage on overhead.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 15 Apr 2017, 13:06
As this is a CR question, let’s start by reading the question stem first. This question about – BEST SUPPORTS – which means this is a – INFERENCE QUESTION.

Arguments Logical Structure:

MFR Spent – 40% - Production
30% - Marketing
30% - Overhead Cost (As it says remainder cost)
SFR Spent - 20% - Budget
60% - Marketing
SFR is now left with 20% of the budget which we don’t know yet where it is spent.

Let’s try to think about the possible inference (1 or 2) for this question. Note, we are not trying to predict the exact answer but we are trying to be close to the possible answer and also this will help us to eliminate the incorrect option choices.

Some inferences - Production % of MFR > Production % of SFR, Marketing % of MFR is < Marketing % of SFR and Overhead Cost % of MFR > Overhead cost of SFR.

Let's review our answer choices with keeping this points in consideration.


(A) The amount of money spent on marketing is directly related to the number of copies sold.
- This cannot be inferred as we don’t know how much money is spent on marketing. We only know %


(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory.
- Once again, this talks about amount spent – same explanation as that for A


(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.
- Revenue is not at all discussed in the passage, applying our own thought can make us fall into the trap. So, C is incorrect to


(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory.
- As you know from the argument that MFR spent 30% on overhead cost, and SFR should have spent either entire 20% or anything less than 20%. This means MFR has spent more percent of its budget on overhead than SFR. – This look like the answer, lets hold this and real the last option.


(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.
- Though this may sound correct but it is a good trap. There can be multiple other factors which can lead to more sales, may the quality of the song was good, etc. E is incorrect.

Correct answer is C

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

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New post 29 Apr 2017, 04:26
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?

MHR -------- SFR
Prod 40 20
Mark. 30 60
OV 30 Do not know.

Total
Selling 800K 1600K (Double than MHR)

Pre-thinking - There is some relation between Marketing Cost and higher selling Or Production cost with higher selling.With this thinking we will do POE.

(A) The amount of money spent on marketing is directly related to the number of copies sold. -(Keep It -OK)
(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory. -------->we can not tell because we do not know total budget for each comp so ---OUT
(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits. ----> Again we can conclude anything about revenue
(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory. This is correct answer because in 2003 MFR OH Cost = 30% of its budget but for SFR it always be OH cost <= 10% of its budget.
(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. -- This is true but we do not know exact/accurate reason for higher selling.

Now between A & D ----> The amount of money ................. (we can't say because we do not know budget for both comp , so A out.
D is correct.

Hope it will help in understanding.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget  [#permalink]

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New post 04 Apr 2019, 20:28
tkarthi4u 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.
( The deals with percentages so it is a very hard decision to take)
(B) Making Hits spent more money on the production of its albums in 2003 than did the Song Factory.
(40% of its total budget may or may not be greater than 20% of its total budget)
(C) Song Factory’s total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.
( Cannot be said. Number of copies is higher does not indicate the total revenues are greater)
(D) In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory.
( Nothing is told about Song Factory overhead cost)
(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.( This seems good to me)
Reasonable conclusion to take. Will go for E.


Exacactly. I also thougt this, but the answer is very different from what we thought. Overhead costs is very specific information and it is limited to that part only. So how can it be answer.
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Re: In 2003, the Making Hits Record Company spent 40% of its total budget   [#permalink] 04 Apr 2019, 20:28
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