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GMAT Statistics
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Author:  questioner [ Wed Jan 26, 2011 5:29 pm ]
Post subject:  GMAT Statistics

A salesman's income consists of a commission and a base salary of $350 per week. Over the past 5 weeks, his weekly income totals have been $406, $413, $420, $436 and $395. What must his average (arithmetic mean) commission be per week over the next two weeks so that his average weekly income is $500 over the 7-week period?

A. $150
B. $245
C. $365
D. $715
E. $730

(C) We need to do this problem step-by-step.

First, we add up the total income amounts for the past 5 weeks:
$406 + $413 + $420 + $436 + $395 = $2070.

To average $500 over 7 weeks, the salesman would need to earn:
$500 × 7 = $3500.

Subtract $2070 from $3500 to determine how much he would need to earn, in total, over the next 2 weeks to average $500 for the 7 weeks:
$3500 – $2070 = $1430.

Since he will earn $700 in base salary over the next two weeks, the commission he must earn in the next two weeks is:
$1430 – $700 = $730.

This is an average of $730/2 = $365 per week for these two weeks.

The correct answer is choice (C).
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Question Statemtn does not clarify the amount for Salary. It misleads the reader to believe that Commission + Salary is $350 instead of the just the base salary of $350.

Author:  Gennadiy [ Wed Jan 26, 2011 5:35 pm ]
Post subject:  Re: GMAT Statistics

Any base salary is a fixed value, while any commission depends on the job results. It's the essence of a commission.

Furthermore, the varying commission is clearly the reason for the total income to be $406, $413, $420, $436 and $395 over the 5 weeks.

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