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# Company WXYZ manufactures and sells only four products:

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Manager
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Company WXYZ manufactures and sells only four products: [#permalink]

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09 Jul 2011, 18:35
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Company WXYZ manufactures and sells only four products: widgets, xylophones, yo-yos and zippers. For the past four years, the company has operated profitably. During that time, it has incurred thirty per cent of its costs manufacturing and distributing xylophones. During the same four years, sales of widgets, yo-yos and zippers have accounted for sixty per cent of the company's revenue.

Which of the following is most strongly supported by the paragraph above?

A. Zippers are more expensive to manufacture than xylophones.
B. Xylophones are the most profitable products produced by WXYZ.
C. Revenues from the sales of yo-yos exceed the costs of producing them.
D. The company's profit margin on xylophones exceeds twenty-five per cent.
E. The revenue of Company WXYZ has not increased in the last four years.
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Re: CR - Inference - 700-level [#permalink]

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09 Jul 2011, 18:58
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D for me.

According to the argument, xylophones Cost Price = 30 % of total manufacturing cost.
xylophones revenue = 40 % of total revenues.

Nothing concrete is mentioned about any other product. Hence the choice should be the one that deals only with xylophones.

Crick
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Re: CR - Inference - 700-level [#permalink]

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11 Aug 2011, 02:32
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what a question sirji !

+1 D

as crick mentioned, logically only D stands a chance to be the contender, and by POE too only D remains. Kudos to both of you.

I verified it mathematically and here it is:

Total Cost Incurred = X
Total Revenue = Y
Total Profit = Y - X
As given in question, the company has operated profitably,
=> Profit is positive
=> Y - X > 0
=> Y > X
=> 1 > X/Y
=> -1< -X/Y .... (1)

Now, we are also given,
Costs Incurred on Xylophone = 0.3X
Revenues from Xylophone = 0.4Y
Profit on Xylophone = Revenues - Costs Incurred = 0.4Y - 0.3X .... (2)

Profit margin = Profit/Revenue

=> Profit Margin for Xylophones = (0.4Y - 0.3X) / 0.4Y
= 1 - 0.75(X/Y)

Using (1), we have:

Profit margin on xylophones = 1 - 0.75(X/Y) > 1 - 0.75 = 0.25

=> Profit Margin is greater than 25%
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Re: CR - Inference - 700-level [#permalink]

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11 Aug 2011, 06:07
good question...
whats the OA and OE as i just can't understand how one can logically arrive at an answer and at the same time eliminate other choices within 2mins
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Re: CR - Inference - 700-level [#permalink]

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11 Aug 2011, 09:33
LifeChanger wrote:
good question...
whats the OA and OE as i just can't understand how one can logically arrive at an answer and at the same time eliminate other choices within 2mins

+1 for D.

A), b), C) are all wrong because you don't know what the cost of W, Y, and Z is individually. E is wrong because you don't know what the revenue was in the n-4 year.
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Re: CR - Inference - 700-level [#permalink]

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11 Aug 2011, 09:34
by the way, this is not 700 level
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Re: CR - Inference - 700-level [#permalink]

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12 Aug 2011, 02:25
Rev = 150 X = 40/100 * 150 = 60

Cost = 100 X = 30

thus profit % = 60/30 * 100 = 200

thus D is clearer than B.

More so,B uses 'most' which is a red flag.

D it is.
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Re: CR - Inference - 700-level [#permalink]

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19 Oct 2011, 23:12
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IMO B
OA and OE plzz
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Re: CR - Inference - 700-level [#permalink]

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20 Oct 2011, 02:17
I will go with D , as all other options can be neglected because :

A.From original question stem widgets, yo-yos and zippers all constitute 60% and it is no mentioned which carries how much waitage .
B.Says Xylophones are the most profitable, which is not clear as the revenu share of the other three products is not given.
C.Irrelivent as neither cost price nor revenue share is given
E.Not mentioned in the question stem
D> That leaves D

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Re: CR - Inference - 700-level [#permalink]

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22 Oct 2011, 01:06
brute of a question! got it wrong:(
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Re: CR - Inference - 700-level [#permalink]

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22 Oct 2011, 07:29
mayansd wrote:
what a question sirji !

+1 D

as crick mentioned, logically only D stands a chance to be the contender, and by POE too only D remains. Kudos to both of you.

I verified it mathematically and here it is:

Total Cost Incurred = X
Total Revenue = Y
Total Profit = Y - X
As given in question, the company has operated profitably,
=> Profit is positive
=> Y - X > 0
=> Y > X
=> 1 > X/Y
=> -1< -X/Y .... (1)

Now, we are also given,
Costs Incurred on Xylophone = 0.3X
Revenues from Xylophone = 0.4Y
Profit on Xylophone = Revenues - Costs Incurred = 0.4Y - 0.3X .... (2)

Profit margin = Profit/Revenue

=> Profit Margin for Xylophones = (0.4Y - 0.3X) / 0.4Y
= 1 - 0.75(X/Y)

Using (1), we have:

Profit margin on xylophones = 1 - 0.75(X/Y) > 1 - 0.75 = 0.25

=> Profit Margin is greater than 25%

Great explanation.
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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24 Dec 2011, 21:38
(D) is the answer. Costs_Xylophone=30% of total cost. Revenue_xylophone=40% of total revenue. Total cost<Total revenue (since company operating profitably). If total cost = total revenue, profit margin of xylophones=25%. Thus, profit margin of xylophones>25%.
(B) is the red herring. Who knows what is the exact breakup of costs and revenues in the grouping of widgets, yo-yos and zippers. For eg., yo-yos can contribute 15% of total revenues and only lead to 10% of total costs. This implies a minimum profit margin of 33.33% (greater than xylophones)...

Not a 700 level question.
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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25 Dec 2011, 06:28
Choice D is the correct answer. With this type of question. The quickest way is to guess. :D
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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25 Dec 2011, 09:11
Great explanation by mayansd.
Its a tricky one. but I GUESS IN THE RANGE OF 650-700 only.
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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25 Dec 2011, 12:13
D
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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25 Dec 2011, 18:44
Should be D, a logical question
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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25 Dec 2011, 22:20
D is the only one that stands out.

+1 for D
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Re: Company WXYZ manufactures and sells only four products: [#permalink]

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26 Dec 2011, 02:17
good question .. got everything eliminated in the first round ..
Re: Company WXYZ manufactures and sells only four products:   [#permalink] 26 Dec 2011, 02:17
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