A supermarket sells both a leading brand of laundry powder a

Question

A supermarket sells both a leading brand of laundry powder and its own brand of laundry powder. On all sizes of the leading brand it makes a profit of 15 percent of cost per box. On all sizes of its own brand it makes a profit of 10 percent of cost per box. For a certain month, from the sales of which of the two brands does the supermarket realize the greater profit?

(1) Ounce for ounce, the supermarket pays a higher wholesale price for the leading brand than it does for its own brand.
(2) Ounce for ounce, the supermarket sells 25 percent more of its own brand than of the leading brand.

KillerSquirrel · Answer

I think the answer is (E)

Leading brand

Sale price = x [amount sold * price per amount]

Cost = 0.85*x

Profit = 0.15*x

Own brand

Sale price = y [amount sold * price per amount]

Cost = 0.9*y

Profit = 0.1*y

I can't see how replacing the amount sold will help , we still don't know what is the price per amount.

I don't think we can assume the price is the same (then as GmatBlackBelt is correct & the answer is (B))

avohden · Answer

There are too many assumptions needed to say that B is right. Margins are relative. Sales price, costs and units sold sold is concrete. Are we assuming the leading brand is more expensive than the store brand or vice versa? Are we assuming the products are similarly priced. What if the store brand is a $1 a box and the leading brand is $10 a box. The absolute margins difference would be vastly different if they leading brand is $1.50 a box. Maybe the leading brand invests more in R&D, marketing and branding which is why the cost is so high.

I was fooled into thinking it was B but after some reflection I can see why the answer is E. This is another question you have to be careful on the wording. You are given information in percentage terms and then asked a question in absolute terms.

I was fooled into thinking it was B but after some reflection I can see why the answer is E. This is another question you have to be careful on the wording. You are given information in percentage terms and then asked a question in absolute terms.

zerosleep · Answer

Stmt 1 is obviously insufficient. So i wont discuss that.

Lets see stmt 2) Ounce for ounce, the supermarket sells 25 percent more of its own brand than of the leading brand
Information we already have-
leading brand make 15% profit per box
own brand make 10% profit per box

We are not told how many boxes of each are present. Suppose, own brand sells 125 ounces. So leading brand 100 ounces. 
Now if the 125 ounce of own brand can fit in just 10 boxes and leading brand's 100 ounces in 50 boxes. Leading brand wins.
If the reverse or even worse(1 leading box and 125 own brand boxes), own brand wins.
HENCE Insufficient.

SO ans- E
Thanks.

papua · Answer

The answer here should be C.

Lets say that the cost of own brand is X $ and for the leading brand Y $.

(1) tells us only that Y is more than X (not sufficient alone)
(2) profit from own brand is X/10 $ and profit from leading brand is 3Y/20 $. If leading brand is sold "N" amount, than own brand is sold "5N/4".

X/10 * 5N/4=XN/8
3Y/20 * N = 3YN/20~YN/7

(2) is also insufficient as we don't know which is is greater X or Y

(1)+(2) is sufficient, as we can say that Leading Brand generates more profit.

kham71 · Answer

Known: Cost = Wholesale price x amount(purchased then sold).

Question provides the following information:

Leading brand profit = Wholesale price x amount x .15
Own brand profit = Wholesale price x amount x .10

Questions: More profit form own brand or leading brand?

Statement 1: Provides information about wholesale price only and no info on amounts purchased, therefore no conclusions or comparisons about profit can be made.

Own brand whole sale price = x
Leading brand wholesale price = x*y, where y > 1.

Statement 1: Provides information about amount only and no info on whole sale price, therefore no conclusions or comparisons about profit can be made.

Amount of leading brand sold = a
Amount of own brand sold = 1.25a

Combined:

Leading brand profit = x*a*.15
Own brand profit = x*y*1.25*a*0.10 = y*(x*a*.125)

y*.125 can be < or > .15 therefore combined is also insufficient and answer is E.

DavidTutorexamPAL · Answer

To answer the question, we need to know the price per brand (or their ratio) and the number of boxes sold per brand (or their ratio).
We'll look for an answer that gives us this information, a Logical approach.

(1) This does not give us the information we need.
Insufficient.

(2) This gives us the ratio between boxes sold but not the absolute price.
Insufficient.

Combined:
If (1) had given us an exact number instead of just a vague 'higher price' this would be sufficient.
As is, we still do not have the information we need.

(E) is our answer.

Hatakekakashi · Answer

Statement 1 - if there was value instead of higher i think A would be sufficient but here it's not

Statement 2 - Super market sells more but no cp/sp to calculate profit

Combining -

cp1>cp2
s2>S1

but nothing gives the actual value.. hence CBD

(E) imo

TaN1213 · Answer

To know which brand realized greater profit on sales for a certain month, we need to know the CP of both brand's product and # of boxes sold for each brand.
1. CP of leading (CP1) > CP of ownbrand (CP2)
We don't know about the # of boxes. Insufficient

2. # of boxes sold for (own= 1.25 leading)
We don't know the CPs. Insufficient

(1+ 2)
To get the result, we must know the answer to the following Qs:

Is the CP of leading so high that the revenue ( CP1 * # of boxes) can not be compensated by the revenue(CP2 * # of boxes sold) of own brand having a lower CP?
Eg. Following are the two cases that are true according to the two statements but yeild different results.
  
  revenue = # of box * CP  
Case 1)  10  *  2 & 4 * 2.5 
20 & 10 R1> R2

case 2)  5  *  2 & 4 * 2.5 
10 & 10 R2= R3

Similarly there can be a case where R3<R3. So we need to know how much greater is the CP1 from CP2.
In case 1 the difference b/w CP1 and CP2 = 10-4 = 6
In case 2 difference b/w CP1 and CP2 = 5-4 = 1

As the difference is narrowing , the cases are changing.
-E-

Kushchokhani · Answer

chetan2u Bunuel KarishmaB

I think this is the only valid reason to mark E that we cannot assume that both the brands hold equal ounces per box. If it were given that they were equal, answer would be C. Request you to confirm my understanding

KarishmaB · Answer

We need to find which brand gives higher profit in a particular month.
 Leading brand - 15% of cost
Own brand - 10% of cost
Are the two costs same? No. If ounce for ounce, leading brand cost is $100 and own brand cost is $50, profit from leading brand is 15 and from own brand is 5. 
If we switch the costs, the profit from leading brand becomes 7.5 and from own brand becomes 10.
Hence cost of both brands (what supermarket pays to get them) is important to know.
Once we know the costs (or their ratio) we will know the profit or relative profit of the two brands. But to know how much profit each brand gave in a month, we need to know how many ounces of each brand were sold. Say if the leading brand gives more profit per ounce, does it mean it gave higher profit? No. It depends on how many ounces were sold. What if very little leading brand detergent was sold but a lot of own detergent was sold? Then profit from own may have been higher.

Hence we need the values for both relative costs and relative amounts sold. Statement 1 only says higher cost but does not specify how much higher. Hence both statement together are not sufficient.

Answer (E)

Posted from my mobile device

Kushchokhani · Answer

KarishmaB

I tested multiple extreme possible values of costs and qty considering the info given in the passage and both statements. All the values suggested that leading brand (LB) will offer higher profit (in value) than own brand (OB).

Values tested-
Case1:
Costs- LB 100 vs OB 99
Qty- LB 100 vs OB 125

Case2:
Costs- LB 100 vs OB 50
Qty- LB 100 vs OB 125

Case3:
Costs- LB 100 vs OB 50
Qty- LB 10000 vs OB 12500

Case4:
Costs- LB 100 vs OB 99
Qty- LB 10000 vs OB 12500

In all above extreme cases, LB has higher profit than OB.

So, answer should be C if "ounces per box" info is not considered.

Request you to help with case examples to substantiate your point.

KarishmaB · Answer

Ah yes! We don't need to test values since in DS, it doesn't help establish insufficiency but I seem to have ignored the 25% extra sold information. It does put a constraint on the amounts sold.

The way the question is framed, I wouldn't expect the box size to have any impact (since the same profit is earned on each size). Every box should be priced as per the number of ounces in it and the cost per ounce should ideally be the same across all boxes. Whether we sell in boxes of 1 ounce or 100 ounce or 125 ounce should ideally not make any difference. 
I do not know the source of the question and I cannot say what the test maker might have had in mind. I would likely think that in costing what would matter is the ounces sold and the cost per ounce.

AmountOB = 1.25 * AmountLB

Profit per ounce for LB = 15% of CostLB
Profit per ounce for OB = 10% of CostOB

The profits obtained will be equal when 15% * CostLB * AmountLB = 10% * CostOB * 1.25 * AmountLB

CostLB/CostOB = 5/6

So profits for both will be equal when cost of LB is 5/6th the cost of OB. But cost of LB is given to be more than cost of OB. 
Hence, profit of LB will be higher.

Perhaps the OP can help with the source and the explanation of the question to understand what the test maker had in mind.

A supermarket sells both a leading brand of laundry powder a

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia