ACME Midwest Sales Manager: I am unhappy to report that

Zarrolou and Mau5 have great posts. However, I also want to analyze the question in other way by plugging in number. Hope it helps.

First of all, to solve the “flaw of reasoning”, you must think about the structure of the argument before examining the answer choices.

The structure of this argument is:
MW sales Manager: I’m unhappy to say our office will not lead the company in sales this quarter
Executive: South sales office had a strong performance this quarter, because they improved sales from 10% to 25%

What the Executive means? He applauded the South office, his reasoning is based on “percentage” data to conclude the performance. This is one of the most frequent traps in GMAT CR, so always keep your eyes on this.

ANALYZE EACH ANSWER:

(A) does not address the reasons why the ACME Midwest Sales Office had a bad quarter.
Wrong. Out of scope. The executive does not mention the reasons of weak sales of MW office. Keep in mind, in "flaw of reasoning", new information is NOT accepted. Just use information in the stimulus.

(B) neglects the possibility that overall sales have increased dramatically.
Wrong. TEMPTING. But it’s wrong. Because if overall sales increased, and South office’s sales improved from 10% to 25%  Definitely can say the South office’s performance was as good as the Executive said ==> No flaw here.

(C) assumes an increase in sales percentage resulted from increased performance.
Correct. Improvement of percentage does not always mean improvement in performance.
For example:
Before: Total company sales = 100. South office accounted for 10% => Its sales = 10
After: Total company sales = 30. South office accounted for 25% => Its sales = 7.5
Clearly, 25% improvement does not mean anything.

(D) uses percentage data when he should be using absolute number data.
Wrong. Tempting. But it’s wrong, because it is NOT the flaw of this argument. If the total sales of the company increased ==> the use of “percentage” is a good measure.

(E) neglects to consider other sales offices.
Wrong. Clearly out of scope. The argument just focuses on the South office’s performance and its improvement in sales percentage.

Hope it's clear.

One flaw in the ACME Executive’s response is that it:

(A) does not address the reasons why the ACME Midwest Sales Office had a bad quarter.
This is not a flaw in the reasoning, since this is not what is discussed by the Executive.

(B) neglects the possibility that overall sales have increased dramatically.
Since we are talking about overall percentages, the increase is not something to worry about.

(C) assumes an increase in sales percentage resulted from increased performance.
Correct, maybe the South is experiencing an economic growth or a nearby office has closed, so the South office will have more clients,...

(D) uses percentage data when he should be using absolute number data.
Since we are talking about the office with the most sales, percentages work just fine.

(E) neglects to consider other sales offices.
This is not a flaw.

(A) does not address the reasons why the ACME Midwest Sales Office had a bad quarter.
The response nowhere needs to address this matter in the given context.

(B) neglects the possibility that overall sales have increased dramatically.
The response is only talking about the performance/sales of the South sales office.The above point doesn't interfere with that.

(C) assumes an increase in sales percentage resulted from increased performance.
The response is neglecting the fact that maybe the net company sales had reduced owing to bad performances from other sales offices.
Say, initially, the net company sales was 100 and the south sales office share was 10. Now, if due to bad performances across, the net company sales decreased to say 20, and the south sales office share was 5, then actually this relative increase in percentage wouldn't have resulted in an increased performance.

(D) uses percentage data when he should be using absolute number data.
As both the percentages are related to the same office, the percentage data is correct, for a relative comparison.[Note, that extrapolating this increase in percentage to increased performance is not correct, as discussed above]

(E) neglects to consider other sales offices.
This is not required for the given response.He was only talking about the share and performance of the South sales office.
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IMO the answer should be D.

I see the argument mentions about improved performance and moves to sales increase from 10% to 25% - but the executive is missing 25% of what... As Mau5 clearly illustrates % doesn't make sense when evaluating sales figures..

The executive should be saying south office last year contributed $10M and this quarter performance leads to its yearly contribution to $25M when west office representative says that they might not be single largest contributor..

For e.g. west contributed $50M to last year total sales of $100M, which is split evenly as $12.5M per quarter might only provide $6.5M this year same quarter. To offset this the south could have provided $6.5M an increase from $2.5M from last year..

Hi nt2010

I don't think D is correct.

The stimulus clearly says: They usually account for around 10% of company sales, but that figure has improved to 25% for this quarter.
"That figure - 25%" refers to percentage of South sales/ company sales.

D says: uses percentage data when he should be using absolute number data. <== This is a flaw of the Executive?

The executive used % to conclude about performance. His reasoning is correct if total sales of company increases ==> improve % = improve in performance (sales).
Thus, we cannot say D is a flaw of the executive's reasoning.

Regards.

The conclusion in the response by the ACME Executive is "the South sales office has had a strong performance this quarter." Using percentage data is not wrong,it is the conclusion which the executive has arrived at from that percentage data,which is at fault. Consider a basic statement like this :

Since our share of total company sales has increased from 10% to 25%, therefore our contribution to the company's total sales has increased. Here, the usage of percentage data is correct, and the conclusion following from that data is also correct.
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The answer should be C
C) assumes an increase in sales percentage resulted from increased performance

increase in sales percentage can resulted from decreased numbers of other sales offices
For example:
Previous quarter: Midwest office had $90M (90%), South office $10M (10%)
Current quarter: Midwest reduced to $30M (75%), South stay the same $10M (25%)

As a result proportion of sales of the South office increased from 10% to 25%, but absolute number is the same

C.

If overall sales of the company decreases and the sales of a particular branch remains constant, then the percentage contribution of that branch to the total sales will definitely increase.

The key flaw is that the executive quotes an increase in a proportion, when the actual reason for that increase could merely be the decline in Midwests' performance.

Hypothetically say the South office performed the same, say $25 in sales, and the Midwest accounted for $125 in sales. This means South accounts for 20%.
Now lets say MW sales decline to $100, but South stays the same $25. South now makes up 25%... this doesn't mean South performed any better, it merely occupies a larger proportion of the sales total, which declined.

In my opinion, there are multiple flaws in ACME executive.
1. Sales manager is talking about Midwest office, but executive is discussing South office.
2. Executive is believing on % increase but without providing the basis, % doesn't tell clear picture of growth or loss.
3. Executive is reasoning increased % in sales for good performance of South office. It might be possible that sales of Midwest shifted to South office.

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