NEW HERE? LEARN MORE
closeclose
Last visit was: 29 Apr 2024, 07:18 It is currently 29 Apr 2024, 07:18
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

You are charged with finding a location for a new factory and are cons

User avatar
L
Sajjad1994
GRE Forum Moderator
Joined: 02 Nov 2016
Posts: 13966
Own Kudos [?]: 33036 [4]
Given Kudos: 5781
GPA: 3.62
Send PM
CAT Tests Forum Quiz Mode
You are charged with finding a location for a new factory and are cons [#permalink] New post   28 Oct 2023, 02:10
4
Bookmarks
Expert Reply
00:00

Difficulty:

95% (hard)

Question Stats:

36% (03:08) correct 64% (03:56) wrong based on 25 sessions
Hide Show timer Statistics
Data Insights (DI) Butler 2023-24 [Question #75, Date: Oct-27-2023] [Click here for Details]


You are charged with finding a location for a new factory and are considering two locations. You have a budget for construction of a new building or renovation of an existing structure, as well as for operating costs. The urban location will require only renovation, which would cost 40% less than building the rural location, where new construction will be necessary. Labor costs at the urban location will run an average of 35% higher than those at the rural location. The maximum operating budget for the rural location is $480,000. Find the maximum cost of construction for which the two locations have equal budgets and the change in the cost of the urban location if the labor budget is reduced by $200,000 and the construction budget is increased by the same amount.
Maximum cost of construction under equal budgets Change in urban budget after $200,000 shift
$190,000
$200,000
$250,000
$260,000
$280,000
$310,000
Submit
Click Submit to add this question to your Error log
ShowHide Answer
Official Answer
Maximum cost of construction under equal budgets: $280,000
Change in urban budget after $200,000 shift: $190,000
User avatar
G
pudu
Senior Manager
Senior Manager
Joined: 12 Mar 2023
Posts: 293
Own Kudos [?]: 94 [1]
Given Kudos: 16
Location: India
Send PM
Re: You are charged with finding a location for a new factory and are cons [#permalink] New post   29 Oct 2023, 07:14
i am getting 224,000 as the cost under equal budget. .4 construction=.35 labour is the way i took. please help me to identify the error
User avatar
B
pablovaldesvega
Intern
Intern
Joined: 26 Apr 2023
Posts: 13
Own Kudos [?]: 113 [0]
Given Kudos: 58
Send PM
Re: You are charged with finding a location for a new factory and are cons [#permalink] New post   29 Oct 2023, 11:43
can someone please provide an explanation?
User avatar
L
Sajjad1994
GRE Forum Moderator
Joined: 02 Nov 2016
Posts: 13966
Own Kudos [?]: 33036 [0]
Given Kudos: 5781
GPA: 3.62
Send PM
CAT Tests Forum Quiz Mode
You are charged with finding a location for a new factory and are cons [#permalink] New post   29 Oct 2023, 11:47
Expert Reply
Official Explanation

The construction budget for the urban site is 40% of c, the construction budget for the rural site. The operating budget for the urban site is 135% of b, the operating budget for the rural site, and b is a maximum of $480,000. If the maximum total budgets are equal, 0.4c + 1.35b = c + b.

Simplifying 0.4c + 1.35b = c + b gives you 0.35b = 0.6c. The maximum value of b is $480,000, so 0.35 × $480,000 = 0.6c, and c = (0.35 × $480,000)/0.6 = $280,000.

If $200,000 is shifted from labor to construction, b = $280,000, and c = $480,000. The urban budget becomes 0.4c + 1.35b = 0.4($480.000) + 1.35($280,000) = $570,000. The original budget was 0.4($280,000) + 1.35($480,000) = $760,000, so the change is $760,000 – $570,00 = $190,000.
User avatar
B
pablovaldesvega
Intern
Intern
Joined: 26 Apr 2023
Posts: 13
Own Kudos [?]: 113 [0]
Given Kudos: 58
Send PM
You are charged with finding a location for a new factory and are cons [#permalink] New post   29 Oct 2023, 11:53
Sajjad1994 wrote:
Official Explanation

The construction budget for the urban site is 40% of c, the construction budget for the rural site. The operating budget for the urban site is 135% of b, the operating budget for the rural site, and b is a maximum of $480,000. If the maximum total budgets are equal, 0.4c + 1.35b = c + b.

Simplifying 0.4c + 1.35b = c + b gives you 0.35b = 0.6c. The maximum value of b is $480,000, so 0.35 × $480,000 = 0.6c, and c = (0.35 × $480,000)/0.6 = $280,000. If $200,000 is shifted from labor to construction, b = $280,000, and c = $480,000. The urban budget becomes 0.4c + 1.35b = 0.4($480.000) + 1.35($280,000) = $570,000. The original budget was 0.4($280,000) + 1.35($480,000) = $760,000, so the change is $760,000 – $570,00 = $190,000.


"The urban location will require only renovation, which would cost 40% less than building the rural location" -> Doesn't that make: renovation_urban=0.6*constuction_rural ??
User avatar
G
pudu
Senior Manager
Senior Manager
Joined: 12 Mar 2023
Posts: 293
Own Kudos [?]: 94 [0]
Given Kudos: 16
Location: India
Send PM
Re: You are charged with finding a location for a new factory and are cons [#permalink] New post   30 Oct 2023, 07:22
Sajjad1994 wrote:
Official Explanation

The construction budget for the urban site is 40% of c, the construction budget for the rural site. The operating budget for the urban site is 135% of b, the operating budget for the rural site, and b is a maximum of $480,000. If the maximum total budgets are equal, 0.4c + 1.35b = c + b.

Simplifying 0.4c + 1.35b = c + b gives you 0.35b = 0.6c. The maximum value of b is $480,000, so 0.35 × $480,000 = 0.6c, and c = (0.35 × $480,000)/0.6 = $280,000. If $200,000 is shifted from labor to construction, b = $280,000, and c = $480,000. The urban budget becomes 0.4c + 1.35b = 0.4($480.000) + 1.35($280,000) = $570,000. The original budget was 0.4($280,000) + 1.35($480,000) = $760,000, so the change is $760,000 – $570,00 = $190,000.


i still have issue. if we take in financial terms operating cost is only for labour, not to the construction. Earlier i took 480,000 as sum of both construction and labour. Now, when i reread the question i understood it is only labour. Then how we equate construction and lavour cost to 480,000.Please help me.
User avatar
L
Sajjad1994
GRE Forum Moderator
Joined: 02 Nov 2016
Posts: 13966
Own Kudos [?]: 33036 [0]
Given Kudos: 5781
GPA: 3.62
Send PM
CAT Tests Forum Quiz Mode
Re: You are charged with finding a location for a new factory and are cons [#permalink] New post   30 Oct 2023, 11:13
Expert Reply
This question is not clear in it language and is ambiguous. I am retiring it. Sorry for the inconvenience.
GMAT Club Bot
gmatclubot
Re: You are charged with finding a location for a new factory and are cons [#permalink]
30 Oct 2023, 11:13
Moderators:
Sajjad1994
GRE Forum Moderator
13966 posts
BottomJee
DI Forum Moderator
1030 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions