Find all School-related info fast with the new School-Specific MBA Forum

It is currently 17 Sep 2014, 11:44

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.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Company X receives most of its revenues from the sale of

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
CEO
CEO
User avatar
Joined: 29 Mar 2007
Posts: 2593
Followers: 16

Kudos [?]: 189 [0], given: 0

GMAT Tests User
Company X receives most of its revenues from the sale of [#permalink] New post 12 Sep 2007, 20:37
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

100% (01:54) correct 0% (00:00) wrong based on 1 sessions
Company X receives most of its revenues from the sale of gasoline through a network of gas stations that it owns across the country. The company purchases ready-for-sale gasoline from several oil refineries at wholesale prices and sells it to the final consumer at its gas stations. Over the next quarter, the management of Company X expects that the market price of gasoline will rise by approximately 10 percent. Therefore, the management projects that the next quarter’s revenues from the sale of gasoline will also increase by approximately 10 percent.

The management's projection is based on which of the following assumptions?

A. Consumption of gasoline at the company’s gas stations will not drop in response to higher prices.

B. Company profits will not decline below their current level.

C. Higher gasoline prices will not reduce the company’s revenues from other business lines.

D. The costs of gasoline purchased by the company for subsequent sale at its gas stations will remain relatively constant.

E. The supply of gasoline is likely to decline over the next quarter.
Manager
Manager
avatar
Joined: 17 Aug 2007
Posts: 78
Followers: 1

Kudos [?]: 3 [0], given: 0

Re: MGMAT CR [#permalink] New post 12 Sep 2007, 20:47
GMATBLACKBELT wrote:
Company X receives most of its revenues from the sale of gasoline through a network of gas stations that it owns across the country. The company purchases ready-for-sale gasoline from several oil refineries at wholesale prices and sells it to the final consumer at its gas stations. Over the next quarter, the management of Company X expects that the market price of gasoline will rise by approximately 10 percent. Therefore, the management projects that the next quarter’s revenues from the sale of gasoline will also increase by approximately 10 percent.

The management's projection is based on which of the following assumptions?

A. Consumption of gasoline at the company’s gas stations will not drop in response to higher prices.

B. Company profits will not decline below their current level.

C. Higher gasoline prices will not reduce the company’s revenues from other business lines.

D. The costs of gasoline purchased by the company for subsequent sale at its gas stations will remain relatively constant.

E. The supply of gasoline is likely to decline over the next quarter.


It should be A. While D looks close, it does not qualify because though the profits may not rise (due to increase in costs) the revenue would rise, as revenues are only linked with sales.
CEO
CEO
User avatar
Joined: 29 Mar 2007
Posts: 2593
Followers: 16

Kudos [?]: 189 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 Sep 2007, 22:05
Nice. I said D cause I thought the passage said profits. Owell
Senior Manager
Senior Manager
User avatar
Joined: 13 Mar 2007
Posts: 296
Location: Russia, Moscow
Followers: 2

Kudos [?]: 21 [0], given: 0

GMAT Tests User
Re: MGMAT CR [#permalink] New post 12 Sep 2007, 23:21
GMATBLACKBELT wrote:
Company X receives most of its revenues from the sale of gasoline through a network of gas stations that it owns across the country. The company purchases ready-for-sale gasoline from several oil refineries at wholesale prices and sells it to the final consumer at its gas stations. Over the next quarter, the management of Company X expects that the market price of gasoline will rise by approximately 10 percent. Therefore, the management projects that the next quarter’s revenues from the sale of gasoline will also increase by approximately 10 percent.

The management's projection is based on which of the following assumptions?

A. Consumption of gasoline at the company’s gas stations will not drop in response to higher prices.

B. Company profits will not decline below their current level.

C. Higher gasoline prices will not reduce the company’s revenues from other business lines.

D. The costs of gasoline purchased by the company for subsequent sale at its gas stations will remain relatively constant.

E. The supply of gasoline is likely to decline over the next quarter.


A is the defender assumption
Manager
Manager
avatar
Joined: 09 Jul 2007
Posts: 178
Followers: 1

Kudos [?]: 11 [0], given: 0

GMAT Tests User
 [#permalink] New post 12 Sep 2007, 23:46
i'll for D..confused between A and D..i guess D wins. cuz if the costs increases then no matter by how much % the price increases the profit will decline..but if the cost is constant then only there will b increase in profitss
Manager
Manager
avatar
Joined: 10 Sep 2007
Posts: 161
Followers: 1

Kudos [?]: 5 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 01:05
"A" for me. The company assumes that consumers will buy the same amount of gas and therefore increase their revenues. If the consumption declines then the profits will decline.
Intern
Intern
avatar
Joined: 11 Sep 2006
Posts: 48
Followers: 1

Kudos [?]: 7 [0], given: 0

 [#permalink] New post 13 Sep 2007, 08:02
I say it is D.

Both A and D are avery close.

Difference:
1)A is defender assumption so it is tempting.
2)A talks about consumtion of gas, which is little out of main point.
main point is increased revenue, which can be addressed by increased constant cost, mentioned in D.

Not sure if marking boundry for main point in this way is right or wrong.
Senior Manager
Senior Manager
avatar
Joined: 27 Jul 2006
Posts: 299
Followers: 1

Kudos [?]: 7 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 09:49
Here the confusion is between the word revenue and profits. Profits are effected by other costs, while revenue is total sales. Here revenue will increase 10 percent only if consumers continue to consume at a steady pace.
Senior Manager
Senior Manager
User avatar
Joined: 13 Mar 2007
Posts: 296
Location: Russia, Moscow
Followers: 2

Kudos [?]: 21 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 10:35
What is OA???
Manager
Manager
User avatar
Joined: 08 Oct 2006
Posts: 216
Followers: 1

Kudos [?]: 5 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 13:39
A wins by a narrow margin.
if the issue were profits, then D would qualify.

For total revenues to increase proportionally, consumers need to buy the same amount.
Hence A.
Current Student
avatar
Joined: 28 Dec 2004
Posts: 3404
Location: New York City
Schools: Wharton'11 HBS'12
Followers: 13

Kudos [?]: 159 [0], given: 2

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 13:46
A it is...i see no mention of profit etc..so no point in bringing it up
Director
Director
User avatar
Joined: 25 Oct 2006
Posts: 652
Followers: 7

Kudos [?]: 190 [0], given: 6

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 14:44
Cause and relationship:

IMO A.

i) Sale constant -> Price - Buying cost = profit
ii) Sale constant - Price increased- Buying cost constant = profit increased

So, Drop in sale or increase in buying cost can harm the conclusion. In A assumption talks about "Drop in Sale". So, That's the choice.
Manager
Manager
avatar
Joined: 07 Sep 2007
Posts: 80
Followers: 1

Kudos [?]: 4 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 14:59
A because if the consumption goes down than it would make the conclusion false.
CEO
CEO
User avatar
Joined: 29 Mar 2007
Posts: 2593
Followers: 16

Kudos [?]: 189 [0], given: 0

GMAT Tests User
 [#permalink] New post 13 Sep 2007, 16:56
sry late to repost. OA is A.
Director
Director
User avatar
Joined: 14 Jan 2007
Posts: 782
Followers: 2

Kudos [?]: 52 [0], given: 0

GMAT Tests User
 [#permalink] New post 14 Sep 2007, 04:13
Clear winner is 'A'.
As the passage talks about the revenue not the profit, the author assumes that the sale of the gasoline will remain unaffected to get the 10% increase in the revenue.
Director
Director
User avatar
Joined: 09 Aug 2006
Posts: 529
Followers: 2

Kudos [?]: 23 [0], given: 0

GMAT Tests User
Re: MGMAT CR [#permalink] New post 20 Sep 2007, 20:21
GMATBLACKBELT wrote:
Company X receives most of its revenues from the sale of gasoline through a network of gas stations that it owns across the country. The company purchases ready-for-sale gasoline from several oil refineries at wholesale prices and sells it to the final consumer at its gas stations. Over the next quarter, the management of Company X expects that the market price of gasoline will rise by approximately 10 percent. Therefore, the management projects that the next quarter’s revenues from the sale of gasoline will also increase by approximately 10 percent.

The management's projection is based on which of the following assumptions?

A. Consumption of gasoline at the company’s gas stations will not drop in response to higher prices.

B. Company profits will not decline below their current level.

C. Higher gasoline prices will not reduce the company’s revenues from other business lines.

D. The costs of gasoline purchased by the company for subsequent sale at its gas stations will remain relatively constant.

E. The supply of gasoline is likely to decline over the next quarter.


I take A. My reasoning is that when the stem mentions the market price then the effect should also be related to market price .i.e the sales at gas station which if decreased will impact the the revenues..
Re: MGMAT CR   [#permalink] 20 Sep 2007, 20:21
    Similar topics Author Replies Last post
Similar
Topics:
Company X receives most of its revenues from the sale of manalq8 4 25 Nov 2011, 13:49
1 Company X receives most of its revenues from the sale of vscid 6 21 Feb 2010, 15:07
2 Company X receives most of its revenues from the sale of trainspotting 9 11 Jul 2009, 23:45
Company X receives most of its revenues from the sale of goalsnr 3 04 Aug 2008, 16:37
Total sales or revenue from the company? homefry 3 30 Nov 2006, 12:44
Display posts from previous: Sort by

Company X receives most of its revenues from the sale of

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.