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Director
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In 1984 Exco, which sells it s products only through [#permalink]
 03 May 2007, 04:28
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In 1984 Exco, which sells it s products only through mail-order catalogs, began distributing its catalog to people who had never purchased Exco’s products, while it continued to distribute the catalog to previous customers. Total dollar sales increased in 1984, but Exco’s profits that year were smaller than in 1983.
Which of the following, if true, contributes most to an explanation of Exco’s smaller profits in 1984, as compared to 1983?
(A) There was a two percent increase in 1984 in the sales tax that consumers had to pay on all purchases from the catalog.
(B) A greater number of catalogs were sent to previous customers than to people who never purchased products from Exco.
(C) In 1984 Exco’s product-manufacturing costs increased by a smaller amount than the products’ selling prices increased.
(D) Customers who never previously purchased products from Exco purchased, on the average, fewer products in 1984 than did previous customers.
(E) The increase between 1983 and 1984 in the cost of mailing the catalogs was greater than the increase in sales from 1983 to 1984.
Please explain. OA later
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Senior Manager
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I will go with E.
Since the cost of mailling the catalogs was more that the greater than the increase in sales, so the profits were less.
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Manager
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E for me.
It shows the added cost.
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Senior Manager
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E.
Explains where the money went, and does not make mute the premise of the passage.
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Intern
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It has to be E !!!
E clearly explains in the lower profit
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Manager
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A sitter . E is the winner.
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Senior Manager
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vshaunak@gmail.com wrote: In 1984 Exco, which sells it s products only through mail-order catalogs, began distributing its catalog to people who had never purchased Exco’s products, while it continued to distribute the catalog to previous customers. Total dollar sales increased in 1984, but Exco’s profits that year were smaller than in 1983. Which of the following, if true, contributes most to an explanation of Exco’s smaller profits in 1984, as compared to 1983? (A) There was a two percent increase in 1984 in the sales tax that consumers had to pay on all purchases from the catalog. Sales tax that consumers pay might affect sales, but it doesn't affect company's profit if sales increase. Out!(B) A greater number of catalogs were sent to previous customers than to people who never purchased products from Exco. Irrelevant. Out!(C) In 1984 Exco’s product-manufacturing costs increased by a smaller amount than the products’ selling prices increased. Costs increase a little, sales increase, prices increase. Why should profit decrease? Out!(D) Customers who never previously purchased products from Exco purchased, on the average, fewer products in 1984 than did previous customers. Doesn't explain profit decrease. If new customers buy something in addition to what buy old customers, and the total dollar sales increase... it's not bad  (E) The increase between 1983 and 1984 in the cost of mailing the catalogs was greater than the increase in sales from 1983 to 1984. It is the answer. The costs are higher than the sales. Profit decreases.Please explain. OA later
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Senior Manager
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Straight E.
Javed.
Cheers!
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Senior Manager
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Straight E.
Javed.
Cheers!
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Manager
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straight E
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Director
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(E)
_________________
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