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A company’s annual expenses are composed entirely of a fixed amount in
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10 May 2018, 01:30
10 May 2018, 01:30
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Question Stats:
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based on 96
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A company’s annual expenses are composed entirely of a fixed amount in costs, plus a variable amount that is directly proportional to the number of clients served. In 2009, the company served 450 clients and its total expense was $830,000. In 2010, the company served 510 clients and its total expense was $896,000. What is the company’s fixed annual expense, in dollars?
(A) 1,844
(B) 1,757
(C) 335,000
(D) 485,000
(E) 830,000
(A) 1,844
(B) 1,757
(C) 335,000
(D) 485,000
(E) 830,000
Manager
Joined: 09 Feb 2018
Posts: 96
Given Kudos: 79
Location: India
Concentration: Real Estate, Finance
Schools: Rotman '21 (S) Foster '21 (D) Goizueta '21 (S) Jones '21 (II) BU Questrom '21 (II) Kelley '21 (II) Babson '21 (II)
GPA: 3.58
A company’s annual expenses are composed entirely of a fixed amount in
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10 May 2018, 01:37
10 May 2018, 01:37
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F -> Fixed Cost
V ->Variable Cost .
F+450V=830000 ->(1)
F+510V=896000 ->(2)
------------------
60V=66000 => V = 1100
-----------------
Substituting in (1) , we get F= 335000
Answer C
V ->Variable Cost .
F+450V=830000 ->(1)
F+510V=896000 ->(2)
------------------
60V=66000 => V = 1100
-----------------
Substituting in (1) , we get F= 335000
Answer C
examPAL Representative
Joined: 07 Dec 2017
Posts: 1050
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Re: A company’s annual expenses are composed entirely of a fixed amount in
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10 May 2018, 01:39
10 May 2018, 01:39
Bunuel wrote:
A company’s annual expenses are composed entirely of a fixed amount in costs, plus a variable amount that is directly proportional to the number of clients served. In 2009, the company served 450 clients and its total expense was $830,000. In 2010, the company served 510 clients and its total expense was $896,000. What is the company’s fixed annual expense, in dollars?
(A) 1,844
(B) 1,757
(C) 335,000
(D) 485,000
(E) 830,000
(A) 1,844
(B) 1,757
(C) 335,000
(D) 485,000
(E) 830,000
To avoid confusion from the wordiness of the problem, we'll first translate it into equation-like notes.
This is a Precise approach.
expenses = fixed + client-dependent
2009: 450 clients, $830,000
2010: 510 clients, $896,000
so the difference between years is 896,000 - 830,000 = 66,000
the difference in clients is 510 - 450 = 60
So the ratio clients : dollars is 60 : 66,000 = 10 : 11,000
So 2009 had a total of 45*11,000 = 495,000 client - dependent dollars
Then the fixed expense is 830,000 - 495,000 = 335,000
(C) is our answer
