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# Corporate Officer: Last year was an unusually poor one for our chemica

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Q49  V35
Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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IMO C

Argument - Pharmaceutical Division is Growing Stronger (criticize or weaken the argument)

A - irrelevant to the argument
B - irrelevant to the argument
D - We are not interested in the 20% from the year before, only the 45% from this year
E - We are not interested in comparing the two (see argument)

C - This definitely weakens the argument as it suggests company profits overall could be down. They might also be down in absolute \$ amount, just a less % than the other divisions.
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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IMO C, As even if % Contributon is increasing, doesn't mean that Actual value of is increasing.

WHAT OA?
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
Went on to search tha answer.....OA is C.........but its pretty tough...no doubt its a CAT ( IIM) ques..But pls someone explain why E is wrong...what is use of 60% of chemical division then...
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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rohansherry wrote:
Went on to search tha answer.....OA is C.........but its pretty tough...no doubt its a CAT ( IIM) ques..But pls someone explain why E is wrong...what is use of 60% of chemical division then...

(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

is the author using the performance of both companies to draw his conclusion? I'd say no
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Q48  V28
Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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@ubsCSG how could u assume that the overall profit haven't changed. The passage strictly mentions about the stats of pharma and chemical. Could u please explain in detail why the answer cannot be E?
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporation’s profits, up from 20 percent the previous year.
On the basis of the facts stated, which of the following is the best critique of the evidence presented above?
(A) The increase in the pharmaceutical division’s contribution to corporation profits could have resulted largely from the introduction of single, important new product.INCORRECT. Even if it is from one product, there is reason to applaud the growth
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporation’s profits usually come from the pharmaceuticals.INCORRECT. Does not make sense
(C) The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved.CORRECT. This clearly shows that the reason for the increase in profits is not improvement. Therefore no reason to applaud the pharma division
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited itself an improvement over the year before.INCORRECT. 20% is an improvement whichever way you look at it
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.INCORRECT. Misleading. We are not comparing the two, we are only trying to see whether there is reason to believe that the pharma division has improved or not

Hope this helps
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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What is the source of this question?

we need to see whether the amount of profit generated is greater then the last year's. Since there is a chance that increase to 25% of the overal profits is simply that the pharmacaeutical's division's profits went sharply down. in this case it may even be the case that chemicals profits are down as well, but no as much as pahrmaceutical
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
I cannot see why C rather than D?
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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andysimple wrote:
I cannot see why C rather than D?

The entire argument is about profits of this year and previous year and hence we need to take previous year's no.s as the base. There is no need to go beyond that. And hence, D is irrelevant for the discussion.

Coming to C:

Conclusion is the P division is doing great and we need to prove this wrong. As the no.s are undisputable facts, we need to find some other reason for the proof. In this context, C wins clearly.
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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(A) The increase in the chemical division’s contribution to corporation profits could have resulted largely from the introduction of a single, important new product. - Irrelevant information - Incorrect
(B) In multi-divisional corporations that have chemical divisions, over half of the corporation’s profits usually come from chemicals - Irrelevant information - Incorrect
(C) The percentage of the corporation’s profits attributable to the chemical division could have increased even if that division’s performance had not improved. - Just because the profit percentage has increased does not mean the performance of the division improved. Correct option
(D) The information cited does not make it possible to determine whether the 25 percent share of profits cited was itself an improvement over the year before. - It has been already referred in the passage which states that profit share has increased from 10 to 25% - Incorrect
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in terms of the percent of total profits attributed to each. - The passage does not compare both the divisions but states the change in share of profit attributed to each - Irrelevant and incorrect

Hope this helps.
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
sidhu09 wrote:
(A) The increase in the chemical division’s contribution to corporation profits could have resulted largely from the introduction of a single, important new product. - Irrelevant information - Incorrect
(B) In multi-divisional corporations that have chemical divisions, over half of the corporation’s profits usually come from chemicals - Irrelevant information - Incorrect
(C) The percentage of the corporation’s profits attributable to the chemical division could have increased even if that division’s performance had not improved. - Just because the profit percentage has increased does not mean the performance of the division improved. Correct option
(D) The information cited does not make it possible to determine whether the 25 percent share of profits cited was itself an improvement over the year before. - It has been already referred in the passage which states that profit share has increased from 10 to 25% - Incorrect
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in terms of the percent of total profits attributed to each. - The passage does not compare both the divisions but states the change in share of profit attributed to each - Irrelevant and incorrect

Hope this helps.

I agree with your reasoning. I have doubt for B. You say that it is irrelevant. Consider this: Normally the share of chemical divisions in the profits of the org. is more than half. Here, the share has reached only quarter stage. It tells that the chemical division is not performing well. A contender choice. How can it be irrelevant at all?
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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I think It should be C.

Conclusion :- Pharmaceutical division becoming stronger
Evidence :- it's share in total profit has increased from 20% to 45%. Pay close attention here. Increase in share doesn't necessarily mean increase in profit. so this can form the best basis to criticize the evidence.

A) Wrong. We are just concerned about whether there is substantial profit increase in pharmaceutical division. doesn't matter whether it comes from a single product or two.

B) Wrong. irrelevant.

C) Contender. This choice states that without any efforts this divisions share could have increased. Then it can be inferred that other divisions have shown poor performance (Probably the chemical division most) so the share of pharmaceutical division in total profit has increased with making any increase in its profit and without getting stronger.

D) Wrong. Again we are only concerned about increase in current year profit and not that of last year.

E) Wrong. This choice can be shell game answer. This could have contender had it provide the reasons why the information is insufficient to compare the performance of both the divisions.
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporation’s profits, up from 20 percent the previous year.
On the basis of the facts stated, which of the following is the best critique of the evidence presented above

Quite simple question based on %.

Conclusion: pharmaceutical division is growing stronger
Premise : Its percentage share/share in profits is growing.

Key: In averages ,percentages, proportions simply remember percent %= (target group)/ (totalgroup) .
Pre assumption : Total group is shrinking , then percent can increase easily even when target group remains constant.

The percentage of the corporation’s profits attributable to the pharmaceutical division could have increased even if that division’s performance had not improved
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
mikemcgarry wrote:
feruz77 wrote:
Corporate Officer: Last year was an unusually poor one for our pharmaceutical division, which has traditionally contributed about 70 percent of the corporation’s profits. It is therefore encouraging that there is the following evidence that the chemical division is growing stronger: it contributed 25 percent of the corporation’s profit up from 10 percent the previous year.

On the basis of the facts stated which of the following is the best critique of the evidence presented above?

(A) The increase in the chemical division’s contribution to corporation profits could have resulted largely from the introduction of a single, important new product.
(B) In multi-divisional corporations that have chemical divisions, over half of the corporation’s profits usually come from chemicals
(C) The percentage of the corporation’s profits attributable to the chemical division could have increased even if that division’s performance had not improved.
(D) The information cited does not make it possible to determine whether the 25 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in terms of the percent of total profits attributed to each.

holidevil wrote:
I agree with your reasoning. I have doubt for B. You say that it is irrelevant. Consider this: Normally the share of chemical divisions in the profits of the org. is more than half. Here, the share has reached only quarter stage. It tells that the chemical division is not performing well. A contender choice. How can it be irrelevant at all?

Dear holidevil
Let's say (B) is true ---- does this mean that, in companies that have chemical divisions, the other divisions (such as pharmaceutical) are anemic? By contrast, the company in this question, in addition to having a chemical division as robust as any out there, also has other divisions that are even stronger, unlike the other chemical companies? In other words, this fact may imply that this company's chemical division is weak, or it may not. We simply don't have enough facts to decide. Remember, all we are comparing are percents. It's quite possible that 15% of one company is considerably more than 60% of another company. In CR terms, all this makes (B) irrelevant --- any fact which could be a strengthener or could be a weaker, pending more as yet unknown facts, is irrelevant. Does this make sense?
fameatop wrote:
Hi Mike,
I am not able to understand how come option C is correct & D is incorrect. Can you kindly throw some light on the same.
Regards, Fame

Dear Fame
This is a great CR question, and I think the real sticking point is between (C) & (D). It comes down to exact wording. Let's look at the exact wording.
(C) The percentage of the corporation’s profits attributable to the chemical division could have increased even if that division’s performance had not improved.
(C) draws the crucial distinction between percentage of profits and actual performance, actual numerical profits. That's the ambiguity at stake in this question. Just because percent goes up does NOT mean that overall profits went up. In particular, if the pharmaceutical division, which previously constituted 70% of the profits, had a sour year, profits for the whole company would be down, and all the smaller divisions would occupy a much larger percentage of that much smaller pie. This goes to the core of the problem.
(D) The information cited does not make it possible to determine whether the 25 percent share of profits cited was itself an improvement over the year before.
This answer choice is about "percent share of the profits" --- this year was 25%, and was this an improvement over last year's percent share in the profits? Well, in fact, the prompt explicitly tells us --- the previous year's share of the profits for the chemical division was 10%, so in terms of percent share in the profits, the 25% is a clear improvement. This answer choice says zilch about the important distinction between percent of profits and actual numerical profits.
Does all this make sense?
Mike

Hi Mike,
conclusion says pharma going stronger does that really mean performance of the pharma division is good or we are assuming nothing other than performance be stronger.
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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Hi Mike,
conclusion says pharma going stronger does that really mean performance of the pharma division is good or we are assuming nothing other than performance be stronger.

I'm happy to respond.

Does all this make sense?
Mike
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
mikemcgarry wrote:
Hi Mike,
conclusion says pharma going stronger does that really mean performance of the pharma division is good or we are assuming nothing other than performance be stronger.

I'm happy to respond.

Does all this make sense?
Mike

Hi Mike , thanks for responding back. Actually my concern was with C and E, but reading again and again your explanation above made things clearer. E is actually out of scope, because we need to provide critic to evidence and evidence is about chemical only. But i did not understand your point in
if the pharmaceutical division, which previously constituted 70% of the profits, had a sour year, profits for the whole company would be down,(understood) and all the smaller divisions would occupy a much larger percentage of that much smaller pie. This goes to the core of the problem(not clear how does this relate to main point of the passage)
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Re: Corporate Officer: Last year was an unusually poor one for our chemica [#permalink]
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Hi Mike , thanks for responding back. Actually my concern was with C and E, but reading again and again your explanation above made things clearer. E is actually out of scope, because we need to provide critic to evidence and evidence is about chemical only. But i did not understand your point in
if the pharmaceutical division, which previously constituted 70% of the profits, had a sour year, profits for the whole company would be down,(understood) and all the smaller divisions would occupy a much larger percentage of that much smaller pie. This goes to the core of the problem(not clear how does this relate to main point of the passage)

Excellent question, my friend. I will try to explain.

Let's think about real numbers. Suppose, in previous years, the profits were \$10 million. The pharmaceutical division produced 70% of those, or \$7 million dollars. Let's assume that was true last year. Last year, the chemical division contributed 10%, or \$1 million in profits. Let's say a third fictional Division X accounted for the other \$2 million in profits, or 20%.

Now, this year, the pharmaceutical division had an off year. Let's make this extreme, with \$7 million going down to \$1 million. Assume that the other two divisions remained unchanged: the chemical division still contributed \$1 million, and Division X producing \$2 million. Now, the total profits is only \$4 million. The chemical division accounts for 25% of this, and Division X accounts for 50%.

OK, with all this in mind, what I was saying was that when the pharmaceutical division decreases, it decreases the size of the whole pie, because it was a very big piece of that pie. This means that the same cash value contribution from the smaller divisions (e.g. chemical and Division X) will account for higher percentages because the total has gotten smaller. In the scenario I proposed, chemical went from 10% to 25%, and Division X went from 20% to 50%, even though they contributed the exact same dollar amount in both years. Those same dollar amounts represent higher percentages, only because the total has gone down.

This is the core of the fallacy of the argument. The Corporate Officer suggest that the company is in good shape, because the chemical division went from 10% to 25%, as if that represents growth, but as my numerical scenario demonstrates, that percentage increase might represent not a single dime of increase in profits, but just the fact that the total profits decreased.

In this numerical scenario, the total profits went from \$10M to \$4M. There's absolutely nothing positive about that. The fact that the \$1M from the chemical division used to be only 10% of \$10M and now is 25% of \$4M is irrelevant: it does not mean that any more profits are arising, or any other increase will offset the losses in the pharmaceutical division. It's a completely fallacious suggestion, and choice (C) goes to the core of this fallacy.

Does all this make sense?
Mike
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