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

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Re: The total cost of producing item X is equal to the sum of it  [#permalink]

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New post 22 Jun 2014, 21:12
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gauravsoni wrote:
VeritasPrepKarishma wrote:
GMATD11 wrote:
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

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

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Guys i marked B but its wrong.

Pls discuss


The reason 'B' is not the answer is that you are not allowed to 'assume' anything in DS questions.
You know that production cost increased by 5%. Using statement 2, you also see that production cost is a sixth of the total cost. So you assume that you know the change in the total cost. But remember, you are assuming here that overhead cost hasn't changed. Since you do not know whether overhead cost is the same or has changed, you cannot say anything about the decrease/increase in the overall cost. Even if you overlooked this, statement 1 should have reminded you that overhead cost could have changed too. Hence the answer has to be (c).


Hi Karishma, Can you please explain why A can't be the answer.

According to me,
Total cost = OC + PC ------A

Using 1st stat , TC = 1.13 OC + .95 PC ------- B

We can now just substitute some value for OC and PC in A then modify the values to percent in B
Then using A and B we can find the percent change since they are not asking the actual cost.


Ok, let's continue and find the percent change in total cost.

TC = OC + PC

We don't know how much of total cost is OC and how much is PC. Let's assume that total cost is 200 and OC = 100, PC = 100

New TC = 1.13 OC + .95 PC
New TC = 1.13*100 + .95*100 = 208
This is a 4% increase.

Now let's assume that of the total cost of 200, OC = 50, PC = 150

New TC = 1.13*50 + .95*150 = 199
This is a 0.5% decrease.

Note that the % change in total cost is dependent on how the total cost is divided between OC and PC. Since statement 1 alone doesn't tell us how it is divided, we don't know whether there is an increase/decrease in total cost and how much.
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Re: The total cost of producing item X is equal to the sum of it  [#permalink]

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New post 24 Jan 2017, 10:47
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iliavko wrote:
Can someone please post a full resolution for this thing? I dont get the algebra...

And why is B not sufficient???


Stmnt 2 is not sufficient.

The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

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

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Total Cost = Overhead Cost + Production Cost

We need to find the change in total cost. The question stem gives the percent decrease in production cost. But stmnt 1 gives the percent change in overhead cost. Without knowing the change in overhead cost, you cannot calculate the change in total cost. You cannot assume that there is no change in overhead cost.
Stmnt 2 tells us that if total cost was 120, 100 was overhead cost and production cost was 20. We know how 20 changed. But we also need to know whether and how 100 changed to know how 120 changed.

Hence, both statements are needed.

Answer (C)
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Re: The total cost of producing item X is equal to the sum of it  [#permalink]

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New post 28 May 2017, 20:05
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GMATD11 wrote:
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

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

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Guys i marked B but its wrong.

Pls discuss


Goal: determine the exact percent increase/decrease in the total cost of producing item X in January. In order to arrive at a specific value, we need to know the relative change for the overhead and production costs, since they sum to the total cost, as well as their relative size. We are told that production costs fell by 5%.

Statement 1) We know that the overhead cost increased by 13%, but we don't know its size or the size of the production costs. Insufficient.

Statement 2) We are told that the overhead costs are 5 times the production costs, but we don't know the size of either. Without the size, we can't do a weighted average to find the overall change. Insufficient.

Statements 1+2) We are told that the relative sizes of both as well as the change to the variable costs over the period we care about, so we can set up a weighted average formula:

1/6*(-5%) + 5/6(13%) = 10%

Sufficient.
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The total cost of producing item X is equal to the sum of it  [#permalink]

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New post 17 Feb 2018, 06:00
GMATD11 wrote:
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

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

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Guys i marked B but its wrong.

Pls discuss



Hi,

I saw many replies to this and people rejected B because QUESTION DOES NOT TELL US ABOUT CHANGES IN OVERHEAD COST!

My query is WHY ON EARTH ARE WE WORRIED ABOUT Overhead cost?


We are given
C= O+P

and P in January became = 95/100 *P
Cost in January will be = O + 95/100 * P

Statement 2 ) Before changes, O = 5P

So our original eqn will be

C= 6P ...................................... eqn 1 (before change)
C = 6 * 95/100 * P....................... eqn 2 (after change)

Hence we can find out percent change! isn't it?


I need help please GMATNinja bb VeritasPrepKarishma Bunuel
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Re: The total cost of producing item X is equal to the sum of it  [#permalink]

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New post 19 Feb 2018, 03:48
rocko911 wrote:
GMATD11 wrote:
The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?

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

(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.

Guys i marked B but its wrong.

Pls discuss



Hi,

I saw many replies to this and people rejected B because QUESTION DOES NOT TELL US ABOUT CHANGES IN OVERHEAD COST!

My query is WHY ON EARTH ARE WE WORRIED ABOUT Overhead cost?


We are given
C= O+P

and P in January became = 95/100 *P
Cost in January will be = O + 95/100 * P

Statement 2 ) Before changes, O = 5P

So our original eqn will be

C= 6P ...................................... eqn 1 (before change)
C = 6 * 95/100 * P....................... eqn 2 (after change)

Hence we can find out percent change! isn't it?


I need help please GMATNinja bb VeritasPrepKarishma Bunuel


The problem with your method is that you are assuming that the overhead cost REMAINS SAME. That may not be true.

Before changes, O = 5P
C = O + P
After changes O may not be 5 times P. What if O actually increases? Since P decreases in Jan, O will be more than 5 times P.
So you cannot write C = 5P + P for January.

Statement 1 should anyway give you a hint that statement 2 is not sufficient since you do not know the change in O. Stmnt 1 tells us that there is a change in O and the two statements cannot be in conflict.
Hope this helps.
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Re: The total cost of producing item X is equal to the sum of it &nbs [#permalink] 19 Feb 2018, 03:48

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