A clothing store's revenue last May was 6 percent less than

Question

A clothing store's revenue last May was 6 percent less than its revenue last April. The store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Was the stores gross profit last May less than its gross profit last April?

(1) The stores revenue last May was $2,400 less than its revenue last April.
(2) The stores expenses last May were 4 percent less than its expenses last April.

01643

(1) The stores revenue last May was $2,400 less than its revenue last April.
(2) The stores expenses last May were 4 percent less than its expenses last April.

01643

mittalg · Accepted Answer

Lemme try and help you on this one.

The easiest way out is to put the alphabetical statements in the form of equations in as minimum variables as possible.

Let us assume the revenue for April = R
Revenue for May therefore is = 0.94 R

Let the expense for April = EA
Let the expense for May = EM

We are not given any relationship between EA and EM

But we also know that R > EA

Now what we are asked is:

R- EA > 0.94 R - EM

or

0.06 R > EA - EM

1) The stores revenue last May was $2,400 less than its revenue last April. This statement does not tell us any relationship between EA and EM which is required to solve the inequality. Hence, it is not sufficient.

2) The stores expenses last May were 4 percent less than its expenses last April.
It says EM = 0.96 EA

Therefore, we get EA - EM = 0.04 EA

Hence, out inequality can be reduced to

0.06 R > 0.04 EA
or

R> 2/3 EA

Since we already know R> EA, it has to be greater than 2/3 EA. Hence, this statement is sufficient to answer the question.

Therefore B as an answer.
Hope it helps!!!

PiyushK · Answer

Solution : Statement (1) is not sufficient. Statement (2) is sufficient, refer following figure. Revenue.jpg

BangOn · Answer

Gross Profit = Revenue - Expense
Revenue > Expense as given for both months.

Revenue Expense
April R E
May .94R .96E

Is R - E > .94R - .96E

Yes.

OA B.

asimov · Answer

I think this one is pretty difficult. My math isn't that good, so I had to use a plug-n-chug method.

Given the below equations:
 Gross Profit = Revenue - Expense
Revenue > Expense as given for both months.

Revenue Expense
April R E
May .94R .96E

Is R - E > .94R - .96E ? 
Assume some extreme cases:
 Case 1:  R=1000 | E=999.99
R-E = 0.01 | .94R-.96E = -19.99 | April > May
 Case 2:  R=1000 | E=0
R-E = 1000 | .94R-.96E = 940 | April > May

So no matter what, April always greater than may.

jgomey · Answer

I think this one is pretty difficult. My math isn't that good, so I had to use a plug-n-chug method.

Given the below equations:
 Gross Profit = Revenue - Expense
Revenue > Expense as given for both months.

Revenue Expense
April R E
May .94R .96E

Is R - E > .94R - .96E ? 
Assume some extreme cases:
 Case 1:  R=1000 | E=999.99
R-E = 0.01 | .94R-.96E = -19.99 | April > May
 Case 2:  R=1000 | E=0
R-E = 1000 | .94R-.96E = 940 | April > May

So no matter what, April always greater than may.

I did the same, but selecting values for this question made me feel vulnerable to a yes/no outcome, so I was looking for an algebraic explanation. Also, the question indicates that revenue is greater than expense for both months, so I don't think you can end up a with a negative value for May.

These numbers work a bit better for your first example.

May: Revenue = 1000 Exp = 200
April: Revenue= 940 Exp= 192

Now that I think about it, I may have just answered my own question!

asimov · Answer

Thought about it a bit more.

Simplifying algebraically:

.94R-.96E = .94R-.94E-.02E = .94(R-E)-.02E
Since we are subtracting, we assume E is positive (-E is negative). R-E > .94 (R-E) ALWAYS (given R-E is positive). Thus, R-E > 0.94 (R-E) – 0.02E

gmacforjyoab · Answer

Stmt 1 - Insuff clearly

Stmt 2 -
April May
Revenue------------ R 0.94R
Expense------------ E 0.96E

Given - R>E
Question - is Profit in May < Profit in April ( i.e 0.94R-0.96E < R-E ?)
Simplifying the above , we get is 4E>6R ? Ans is NO since R>E . Sufficient

desaichinmay22 · Answer

Let x be the revenue for April. Therefore revenue for May is 0.94x.
Let y be the cost for April.

We are asked whether GP for May is less that GP for April?

Gross Profit = Revenue - Cost
GP for April = (x-y)

Change in revenue and change in cost will impact GP. In comparison to April, May has seen reduction in both cost and revenue.
In order for GP of May to be less than that of April, reduction in revenue has to be greater than reduction in cost.
so we can rephrase the question as
is reduction in revenue > reduction in cost ?

statement 1 :- The stores revenue last May was $2,400 less than its revenue last April.
No information about cost is given. statement in insufficient.

statement 2 :- The stores expenses last May were 4 percent less than its expenses last April.
Therefore cost for May is 0.96y.
We want to find whether 
is reduction in revenue > reduction in cost ?
is 0.6x(reduction in revenue)>0.4y(reduction in cost)
x/y>0.4/0.6
x/y>2/3 ....... ?

In the question it is given that the store's revenue last April was greater than its expenses last April.
so x/y has to be greater that 1.
Therefore x/y is greater that 2/3 and hence GP for May is less than that for April.
Statement is sufficient.

Ans - B

Patronus · Answer

Given: a) R_m=0.94*R_a b) R_m>E_m c) R_a>E_a Legend: m = March, a = April Question : Is P_m

felippemed · Answer

My little contribution based on the previous explanations above.

Cez005 · Answer

a=April
m=May
R=Revenue
E=Expenses

Profit April: Ra-Ea
Profit May: 0.94Ra-Em

1) No info on expenses. Insuff.

2)

Profit April: Ra-Ea
Profit May: 0.94Ra-0.96Ea

For May, the revenue has decreased by a greater percentage than the expenses. Therefore, the profit in April is greater. Suff. B

Agree? Kudos. Better method? Please comment.

daviddaviddavid · Answer

we can solve this with logic

6% from something bigger is > 4% from something smaller

warriorguy · Answer

Tricky question.

A clothing store's revenue last May was 6 percent less than its revenue last April. The store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Was the stores gross profit last May less than its gross profit last April?

(1) The stores revenue last May was $2,400 less than its revenue last April.
(2) The stores expenses last May were 4 percent less than its expenses last April.

Let the Revenue in May and April be Rm and Ra respectively. Also, let the expenses in May and April be Em and Ea resp.

Given that Ra-Rm=0.06 and Rm> Em and Ra> Ea.

Profit = Revenue - Expenses

To evaluate: Rm-Em < Ra-Ea?

Ea-Em < Ra- Rm or Ea-Em < 0.06

Statement 1: The stores revenue last May was $2,400 less than its revenue last April.

From this statement, we can deduce about the revenue values but no information is presented about the expenses. As such, we won't be able to determine the condition.

Statement 2: The stores expenses last May were 4 percent less than its expenses last April.

Em=0.96* Ea.

Ea-Em= Ea-0.96*Ea = 0.04 * Ea

Since Ea < Ra (given) , 0.04 Ea < 0.04 Ra < 0.06 Ra

Hence B alone is sufficient.

ScottTargetTestPrep · Answer

We can start by using the following variables:

a = revenue last April

b = expenses last April

c = revenue last May

d = expenses last May

We are given that a clothing store's revenue last May was 6 percent less than its revenue last April. Thus,

c = 0.94a

We are also given that the store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Thus:

c > d and a > b

We need to determine whether a - b > c - d, or

Is a - b > 0.94a - d ?

Is 0.06a > b - d ?

Statement One Alone:

The store’s revenue last May was $2,400 less than its revenue last April.

We can create the following equation:

c = a - 2,400

Since c = 0.94a, we can substitute 0.94a for c in the above equation and we have:

0.94a = a - 2,400

2,400 = 0.06a

a = 40,000 and c = 37,600

However, we still cannot determine whether 0.06a > b - d. Statement one alone is not sufficient to answer the question. We can eliminate answer choices A and D.

Statement Two Alone:

The store’s expenses last May were 4 percent less than its expenses last April.

Using the information in statement two, we can create the following equation:

d = 0.96b

We can substitute 0.96b for d in the inequality question and we have:

Is 0.06a >b - 0.96b ?

Is 0.06a > 0.04b

Is 6a > 4b ?

Since we are given that a IS GREATER THAN b, then 6a MUST BE GREATER THAN 4b. Statement two alone is sufficient to answer the question.

Answer: B

avigutman · Answer

Video solution from Quant Reasoning starts at 14:40 Subscribe for more: https://www.youtube.com/QuantReasoning? ... irmation=1 https://www.youtube.com/watch?v=g4aR4devPks

GMATGuruNY · Answer

Statement 1:
No information about expenses. 
INSUFFICIENT.

Statement 2:
Let the revenue in April = 100, with the result that the revenue in May = 6% less $100 = 94
Let x = the expenses in April, with the result that the expenses in May = 4% less than x = 0.96x
Is May's profit less than April's profit?
Translated into math:
94 - 0.96x < 100 - x ?
0.04x < 6 ?
x < 150 ?
Since the prompt requires that the expenses in April be less than the revenue in April, we know that x < 100.
Thus, the answer to the rephrased question stem is YES.
SUFFICIENT.

B

KarishmaB · Answer

April - Revenue, Expense, Profit

May - 0.94*Revenue

We don't know how their expenses are related and hence we can't find whose profit is more. Even with lower revenue, if May had much lower Expense, its profit could have been higher.

(1) The stores revenue last May was $2,400 less than its revenue last April.

Still gives us relation between revenues only. Not sufficient alone.

(2) The stores expenses last May were 4 percent less than its expenses last April.

May - 0.94*Revenue, 0.96*Expense

We know that "Revenue - Expense = Profit." If both Revenue and Expense reduce by 6%, then Profit would also be lower by 6%
0.94*Revenue - 0.94*Expense = 0.94*Profit (Makes sense)

But here is the problem - the expense here reduced by only 4%. This means the profit was even lower than 0.94*Profit in May.

Hence, for sure profit of May was lower than that of April.

Answer (B)

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