Solutions

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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?

I. The stores revenue last May was $2,400 less than its revenue last April.

II. The stores expenses last May were 4 percent less than its expenses last April.


 

Option A:

Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient to answer the question asked.

Option B:

Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient to answer the question asked.

Option C:

BOTH statements (1) and (2) TOGETHER are sufficient to answer the question asked, but NEITHER statement ALONE is sufficient to answer the question asked.

Option D:

EACH statement ALONE is sufficient to answer the question asked.

Option E:

Statements (1) and (2) TOGETHER are NOT sufficient to answer the question asked, and additional data specific to the problem are needed.

Difficulty Level

Hard

Solution

Option B is the correct answer.


Option Analysis

Let,

Ra -> Revenue at April

Rm -> Revenue at May

Ea -> Expense at April

Em -> Expense at May

We know that profit = revenue – expense

From Question, we can deduce Rm = .94Ra

We are asked to find whether Ra-Ea > Rm-Em or not. (We need to know Ea and Em to confirm)

Statement I is insufficient: It talks about Revenue. And nothing mentioned about Expense. Hence Insufficient.

Statement II is sufficient: State that Em = .96Ea

Now, Rm-Em = (.94Ra) – (.96Ea)

Hence Ra-Ea > Rm-Em Sufficient.