A consumer electronics company's two divisions performed with remarkab

Question

A consumer electronics company's two divisions performed with remarkable consistency over the past 3 years: in each of those years, the domestic products division has accounted for roughly 20 percent of dollar sales and 40 percent of profits, and the commercial products division for the balance.

Which of the following can properly be inferred regarding the past three years from the statement above?

A. Total dollar sales for each of the company's divisions have remained roughly constant.
B. The domestic products division has faced stiffer competition in its markets than has the commercial products division.
C. The commercial products division has realized lower profits per dollar of sales than has the domestic products 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 commercial products division's sales than those of the domestic products division.

milanrajb · Answer

I think its C.

Domestic - 20% sales and 40% profit
Commercial - 80% sales and 60% profit

This data clearly shows that the profit margins on Domestic is higher than commercial.

I would request an expert to validate.

Thanks

pavanhra · Answer

Looks like options A,B,C three looks relevant here. as the percentages were given in the question, appropriate answer would be C

Posted from my mobile device

egmat · Answer

Hi milanrajb,

You've got it exactly right! Let me confirm your reasoning with the precise numbers.

Domestic Division:   20%  of sales,  40%  of profits.
 Commercial Division:   80%  of sales,  60%  of profits.

To compare profit per dollar of sales, think of it as a simple ratio:
- Domestic:  40 / 20  =  2  units of profit per unit of sales
- Commercial:  60 / 80  =  0.75  units of profit per unit of sales

So the domestic division squeezes out far more profit from every dollar it sells. This means the commercial division has lower profits per dollar of sales, which is exactly what  answer C  states.

Now, let's also understand why the other choices fail:

-  A  says total dollar sales remained constant. The passage only says the percentages were consistent, not the absolute dollar amounts. The whole company could have been growing or shrinking.

-  B  brings in competition, which is completely outside the scope of the passage.

-  D  claims the product mix is unchanged. We have no information about individual products at all.

-  E  is a  trap . It says highly profitable products made up a higher percentage of the commercial division's sales. But if that were true, the commercial division should have higher profit margins, not lower ones. E actually contradicts the data.

Your instinct was spot on.   Key Insight:  When a passage gives you percentages of two different things (sales vs. profits), you can always compare the ratios to draw valid inferences about relative efficiency or margins.

Answer: C

A consumer electronics company's two divisions performed with remarkab

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A consumer electronics company's two divisions performed with remarkab

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