MOKSH wrote:
Toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year. However, the number of toys sold did not increase significantly last year over the previous year.
Each of the following, if true, could explain the apparent discrepancy EXCEPT:
a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys.
b)Toys4Them sold a higher proportion of more expensive toys last year than the previous year.
c)Last year, the number of consumers shopping for toys increased over the previous year.
d)Last year, Toys4Them experienced an unprecedented boom in its divisions that do not sell toys.
e)Because of an economic downturn, Toys4Them heavily discounted its toys during the holiday season two years ago.
IMO , except C & E , all other options clearly resolve the discrepancy.
OA is C not E. However I could nt be able to figure out , how does option E resolve the discrepancy .
So help me to figure out the same ...
Thanks in advance .
This seems to be a very easy question :
Stem : Toys4Them, an online toy merchant, generated $220 million in revenue last year, an 8.6 percent increase over the previous year. However, the number of toys sold did not increase significantly last year over the previous year.
Paradox is if the increase in sales is very less, how did the revenue shoot up by 8.6%.
So, lets solve this paradox.
Pre-thought : 1. Cost per toy has increased.
2. Even if the cost of toys is same, sale of Higher Cost toys is more than lower cost toys ultimately increasing average cost of toys.
3. There is some external source of income which has increased the revenue.
What else.....mmm...
4. Actual no. of toys sold may be higher and we have wrong figure of toys (weird but here it helps to resolve option A).
So, lets come to options now.
a)Last year, Toys4Them changed its accounting policy to no longer count toys given away to charities as sold toys.
Resembles with Pre-thought 4, the actual no. of toys sold (sold + given in charity) is more than last year similar to increase in revenue but we are not counting the number
of toys given to charity this year and hence relative to previous year we can't see the same change in the no. of toys.
b)Toys4Them sold a higher proportion of more expensive toys last year than the previous year.
Resembles Pre-thought 2, Since there is a sale of higher proportion of toys which is expensive so average cost shoot up leading to greater revenue.
c)Last year, the number of consumers shopping for toys increased over the previous year.Not related to revenue of this company. If the number of consumers increased they should have bought more toys. This doesn't help us to resolve paradox.
d)Last year, Toys4Them experienced an unprecedented boom in its divisions that do not sell toys.
Resembles Pre-thought 3, Unprecented boom in other divisions, so revenue increased from there.
e)Because of an economic downturn, Toys4Them heavily discounted its toys during the holiday season two years ago.
Resembles Pre-thought 1, Ok last year it was discounted and hence price of toy was less. This year no discount and hence relatively price per toy is higher.
Answer C