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27 Oct 2010, 18:25
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
65% (01:36) correct
35%
(01:42)
wrong
based on 701
sessions
History
Date
Time
Result
Not Attempted Yet
A bakery estimates its predicted yearly expenditures on ingredients when allocating its annual food budget by adding a correction factor of five percent to its costs from the previous year. This method allows the bakery to quickly and simply account for annual increases in the cost of raw ingredients.
Which of the following, if true, would most call into question the economic soundness of the bakery's method for estimating its food budget?
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
(B) Increases in the cost of raw materials have not varied considerably in the past decade.
(C) This method of budgeting might discourage the bakery from developing new and innovative recipes.
(D) The bakery might allocate too little money for its other operating expenses.
(E) Some bakery executives do not believe this is the best practice.
I disagree with the OA.
Which of the following, if true, would most call into question the economic soundness of the bakery's method for estimating its food budget?
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
(B) Increases in the cost of raw materials have not varied considerably in the past decade.
(C) This method of budgeting might discourage the bakery from developing new and innovative recipes.
(D) The bakery might allocate too little money for its other operating expenses.
(E) Some bakery executives do not believe this is the best practice.
I disagree with the OA.
The OA is A, and the OE is:
I bolded the problem with this explanation and with answer choice A. Answer A says that the bakery will REPEATEDLY budget for ingredients that it no longer uses. But the passage says that the bakery estimates its costs "by adding a correction factor of five percent to its costs from the previous year." If the bakery stops using a certain ingredient, then yes, its budget for the next year will include costs for this ingredient - but not for any subsequent year. For example, if the bakery stops using ingredient X in 2010, then its budget for 2011 will include X, but the budget for 2012 WILL NOT, because it's based on the costs from 2011 - which did not include that ingredient. So the bakery cannot REPEATEDLY budget for obsolete ingredients.
I went for option B, which I think is a much better answer - if the costs of materials aren't going up, but the bakery is budgeting more and more money for them, then they will be over-budgeted for their materials and, therefore, under-budgeted for other things.
Thoughts?
Quote:
I bolded the problem with this explanation and with answer choice A. Answer A says that the bakery will REPEATEDLY budget for ingredients that it no longer uses. But the passage says that the bakery estimates its costs "by adding a correction factor of five percent to its costs from the previous year." If the bakery stops using a certain ingredient, then yes, its budget for the next year will include costs for this ingredient - but not for any subsequent year. For example, if the bakery stops using ingredient X in 2010, then its budget for 2011 will include X, but the budget for 2012 WILL NOT, because it's based on the costs from 2011 - which did not include that ingredient. So the bakery cannot REPEATEDLY budget for obsolete ingredients.
I went for option B, which I think is a much better answer - if the costs of materials aren't going up, but the bakery is budgeting more and more money for them, then they will be over-budgeted for their materials and, therefore, under-budgeted for other things.
Thoughts?
27 Oct 2010, 20:46
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the answer is a clear A.
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
-----------------------------------------------------------
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
(B) Increases in the cost of raw materials have not varied considerably in the past decade. Supports the question statement so cannot weaken it
(C) This method of budgeting might discourage the bakery from developing new and innovative recipes. Off track
(D) The bakery might allocate too little money for its other operating expenses.does not provide any evidence to question the method
(E) Some bakery executives do not believe this is the best practice.
this is an opinion and cannot be used to question a practice
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
-----------------------------------------------------------
(A) The bakery might repeatedly account for the use of a costly ingredient that it no longer uses.
(B) Increases in the cost of raw materials have not varied considerably in the past decade. Supports the question statement so cannot weaken it
(C) This method of budgeting might discourage the bakery from developing new and innovative recipes. Off track
(D) The bakery might allocate too little money for its other operating expenses.does not provide any evidence to question the method
(E) Some bakery executives do not believe this is the best practice.
this is an opinion and cannot be used to question a practice
piyushagarwal
Joined: 30 Jul 2010
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28 Oct 2010, 02:13
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IMO A.
@tehjay - I understand your concern. Will try to explain.
The budget is for a list of A-Z items of which costs are known. Every year when budgeting, folks at bakery adds correction factor of five percent to its costs from the previous year... This simply means that they use the same list of A-Z items with updates costs from last year and add 5%. It does not matter that a item X was actually bought/used last year. They still budget for it since nowhere its mentioned that the item is excluded or every year the budget is made only for the items used last year.
Hope that helps..
@tehjay - I understand your concern. Will try to explain.
The budget is for a list of A-Z items of which costs are known. Every year when budgeting, folks at bakery adds correction factor of five percent to its costs from the previous year... This simply means that they use the same list of A-Z items with updates costs from last year and add 5%. It does not matter that a item X was actually bought/used last year. They still budget for it since nowhere its mentioned that the item is excluded or every year the budget is made only for the items used last year.
Hope that helps..
