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# A company's two division performed with remarkable

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A company's two division performed with remarkable [#permalink]

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15 Feb 2007, 21:19
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74% (01:59) correct 26% (01:06) wrong based on 506 sessions

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A company's two division performed with remarkable consistency over the past three years: in each of those years, the pharmaceuticals division has accounted for roughly 20 percent of dollars sales and 40 percent of profits, and the chemicals division for the balance.

Regarding the past three years, which of the following can properly be inferred from the statement above?

A) Total dollars sales for each of the company's divisions have remianed roughly constant.

B) The pharmaceuticals division has faced stiffer competition in its markets than has the chemicals division.

C)The chemical division has realized lower profits per dollars of sales than has the pharmaceuticals division.

D)The product mix offered by each of the company's divisions has remained unchanged.

E) Highly profitable products accounted for a higher percentage of the chemicals division's sales than of the pharmaceuticals division's.
[Reveal] Spoiler: OA
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Re: A company's two division performed with remarkable [#permalink]

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15 Feb 2007, 21:33
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faifai0714 wrote:
A company's two division performed with remarkable consistency over the past three years: in each of those years, the pharmaceuticals division has accounted for roughly 20 percent of dollars sales and 40 percent of profits, and the chemicals division for the balance.

Regarding the past three years, which of the following can properly be inferred from the statement above?

A) Total dollars sales for each of the company's divisions have remianed roughly constant.

B) The pharmaceuticals division has faced stiffer competition in its markets than has the chemicals division.

C)The chemical division has realized lower profits per dollars of sales than has the pharmaceuticals division.

D)The product mix offered by each of the company's divisions has remained unchanged.

E) Highly profitable products accounted for a higher percentage of the chemicals division's sales than of the pharmaceuticals division's.

It is very helpful to pick numbers for such questions.

Assume Total sales=500 and Total profits=100

Sales of pharmaceutical division=0.20*500=100
Profits from pharmaceutical division=40
Profits per dollar of sale=40/100=0.4

Sales of chemical division=0.80*500=400
Profits from chemical division=60
Profits per dollar of sale=60/400=0.15

0.15<0.40

From this, we can conclude that C is true.
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Re: A company's two division performed with remarkable [#permalink]

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16 Feb 2007, 10:26
C..
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Re: A company's two division performed with remarkable [#permalink]

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16 Feb 2007, 20:29
yep..one more C.
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Re: A company's two division performed with remarkable [#permalink]

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17 Feb 2007, 11:18
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It's 'C'

For ex. let's assume total sale is 100 and total profit is 30%, which is 30.

Pharma.: Total sale 20%, which is 20 , profit is 12 (40% of 30). Profit margin is: 100*12/20 = 60%

Chem.: Total sale 80%, which is 80, profit is 18 (60% of 30). Profit margin is: 100*18/80 = 22.5%

Therefore, Chem dept. has lower profit margin than Pharma.
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Re: A company's two division performed with remarkable [#permalink]

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17 Feb 2007, 19:02
C !
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Re: A company's two division performed with remarkable [#permalink]

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17 Feb 2007, 19:07
C
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Re: A company's two division performed with remarkable [#permalink]

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19 Feb 2007, 00:39
OA is C
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Re: A company's two division performed with remarkable [#permalink]

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07 Aug 2013, 06:47
Always good to have a numerical example for such questions!
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Re: A company's two division performed with remarkable [#permalink]

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04 Jan 2015, 22:17
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: A company's two division performed with remarkable [#permalink]

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26 Jan 2015, 16:32
fozzzy wrote:
Always good to have a numerical example for such questions!

True! Especially, when it's a little unclear to see the logic behind the statements.

Honestly, I really feel that trying to use more logic rather than pure calculations can save you a bunch of seconds --- that can be tacked onto to later questions.

Here, we're given that the P division accounted for 20% of dollar sales, yet made up 40% of profits for the company.

Clearly, once focused into the dollar sales and profits relationship, P has clearly generated highers profits per dollar sales than C has.

I think seeing that relationship right off the bat is something that most people miss, because they don't usually feel that they'll need to see this in order to solve the question ... that is, until they reach the answer choices.

A lot of these numbers and percentages problems can be solved using logic, rather than pure calculations.

Ron Purewal has a great video posted on this topic, and it's really a powerful method to develop for time saving skills. Sure, it takes some getting used to; but, boy does it save you time!
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Re: A company's two division performed with remarkable [#permalink]

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09 Jan 2016, 15:33
Quick question: How do you go about calculating. When you dont know what to calculate. I can see that profit per dollar is mentioned in one of the options. Or the moment I see profile and sales kind of CR question, Just calculate. I am really confused because I didn't calculate when I was solving and I end up choosing A.
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A company's two division performed with remarkable [#permalink]

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25 Jul 2016, 22:36
Can some one explain me the meaning of "chemicals division for the balance"
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Re: A company's two division performed with remarkable [#permalink]

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26 Jul 2016, 17:11
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ashutoshsh wrote:
Can some one explain me the meaning of "chemicals division for the balance"

This means:

The chemicals division (accounted for) for the balance (sales and profits).
In other words, the chemicals division accounted for 80% of sales and 60% of profit.
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Re: A company's two division performed with remarkable [#permalink]

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26 Apr 2017, 23:54
Pharmaceuticals division has accounted for roughly 20 percent of dollar sales and 40 percent of profits, and the chemicals division for the balance. The chemical division, therefore, accounted for 80% of the sales and 60% of the profits.

Pharma -> 20% sales, 40% profits
Chemical -> 80% sales, 60% profits

Pharma -> 20% sales, 40% profits
Chemical -> 80% sales, 60% profits

Lets say the revenue was $200 and profits were$100 (I would LOVE to have that kind of profit margin in real life!)

So, Pharma has $40 (20% of$200) in sales and $40 in profit (40% of$100)
Chemical has $160 (80% of 200) in revenue and$60(60% of $100) in profit. Profit per dollar for Pharma =$40/$40 = 1 which is > than$60/\$160 for Chemical.

Clearly, chemical division realized lower profits per dollar of sales than the pharma division as stated by C.
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Re: A company's two division performed with remarkable   [#permalink] 26 Apr 2017, 23:54
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