Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?Since the Company made profit on product X last year, we can say that
Revenue - Expenses > 0
It's given that Expense(E) = $100,000 + 5 % of Revenue(R)
R - E > 0
R - ($100,000 + 5 % of R) >0
R - 5 % of R > $100,000
95 % of R > $100,000
R > ($100,000/95) * 100
R > 2000,000/19
We need to answer whether the company sold more than 21,000 units of product X last year or not .
(1) The company's total revenue from the sale of product X last year was greater than $110,000.
Since we don't have any idea about the unit price of product X , we will not be able to infer anything about the no of units sold. Statement 1 alone is insufficient.
(2) For each unit of product X sold last year, the company's revenue was $5
Let's assume that no of product X sold last year be N.
Revenue = 5 * N
We already know that R > 2000,000/19
5 * N > 2000,000/19
N > 400,000/19
N > 21052
We can conclude that the company sold more than 21,000 units of product X last year. Hence Statement 2 alone is sufficient.
Option B is the answer.
Thanks,
Clifin J Francis,
GMAT SME _________________
Crackverbal Prep Team
www.crackverbal.com