A manufacturer can recoup it retooling costs for redesigning a product if it sells enough of the product to its distributors to pass its break-even point. Unless retail companies believe the product will sell well, however, they will not buy enough of the product from distributors to enable the manufacturer to recoup its costs. Manufacturers are more likely to retool products if the products have scored favorably in market studies or if large advance orders for the redesigned products have come in before the retooling process is started, or both.

Of the following selections, which one can be appropriately inferred from the above passage?

A) If a manufacturer receives large advance orders for the redesigned product from its distributors, it will recoup its retooling costs
B) Retail companies that stock products based on favorable market studies will sell a lot of products
C) A manufacturer that has recouped its retooling costs has sold enough of the redesigned product to pass its break-even point.
D) A manufacturer that did not get many advance orders for a redesigned product did not make a profit.
E) A manufacturer that had enough sales of a redesigned product to pass its break-even point by a wide margin did not make a profit on its sale of a product.

Facts:
- A manufacturer can recoup it retooling costs for redesigning a product if it sells enough of the product to its distributors to pass its break-even point

- Manufacturers are more likely to retool products if the products have scored favorably in market studies or if large advance orders for the redesigned products have come in before the retooling process is started, or both

Conclusion:
- Unless retail companies believe the product will sell well, however, they will not buy enough of the product from distributors to enable the manufacturer to recoup its costs


X - products have scored favorably in market studies
Y - if large advance orders for the redesigned products have come in before the retooling process is started

If X or Y is true then the conclusion is true.

B - Eliminate - The Q does not talk about the stocking.
C - Eliminate - It is also possible that there are advance orders.
D - Eliminate - Possible that the retooled product has favorable studies.
E - Eliminate - Q talks about the retooling costs and not profits.


A - Correct - If the maufactuerer gets many advance orders that means his products will sell. Which is nothing but our fact Y.
Hence A is the answer.

the statement says the manufacturer can recoup retooling costs if it sells enough to pass breakeven point, but that doesn't necessarily mean that if manufacturer has recouped its retooling costs then it has crossed breakeven point.

it's a case of if A, then B
which doesn't mean, if B, then A,
it only means, if not A, then not B

ok, hope that made sense

Hey Caas,

What is the OA?

VC

Does anyone have some material on CR. I am a bit worried on it.
Plzzzzzzzz help me!!!

Thanks

VC

Thank you guys for the discussion

OA is C.
Source: Nova's Prep book