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The total cost of producing item X is equal to the sum of

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Senior Manager
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The total cost of producing item X is equal to the sum of [#permalink]

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New post 28 Sep 2008, 19:39
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The total cost of producing item X is equal to the sum of item X's fixed cost and variable cost. If the variable cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in January?

(1) The fixed cost of producing item X increased by 13% in January.

(2) Before the changes in January, the fixed cost of producing item X was 5 times the variable cost of producing item X.
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Director
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Re: DS:Fixed and Variable cost [#permalink]

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New post 28 Sep 2008, 19:54
TC= FC + VC

in January VC= 0.95VC i.e TC = FC + 0.95VC

1) TC in January = 1.13FC + 0.95VC

change in total cost of producing item X= (0.13FC - 0.05VC)/(FC + VC)

insuff.

2) FC = 5*VC, TC = 6*VC, But we don't know anything about FC in january. so insuff

Together sufficient

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Re: DS:Fixed and Variable cost [#permalink]

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New post 28 Sep 2008, 22:04
alpha_plus_gamma wrote:
TC= FC + VC

in January VC= 0.95VC i.e TC = FC + 0.95VC

1) TC in January = 1.13FC + 0.95VC

change in total cost of producing item X= (0.13FC - 0.05VC)/(FC + VC)

insuff.

2) FC = 5*VC, TC = 6*VC, But we don't know anything about FC in january. so insuff

Together sufficient


agreed. arrived at same answer with same logic

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Re: DS:Fixed and Variable cost   [#permalink] 28 Sep 2008, 22:04
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