It is currently 19 Oct 2017, 16:29

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Denoma, a major consumer-electronics maker, had a sizeable

Author Message
SVP
Joined: 14 Dec 2004
Posts: 1681

Kudos [?]: 168 [0], given: 0

### Show Tags

28 Jan 2006, 07:15
00:00

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct 0% (00:00) wrong based on 1 sessions

### HideShow timer Statistics

Denoma, a major consumer-electronics maker, had a sizeable decline in sales revenue for its most recent fiscal year. This result appears surprising, because electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced.

Which of the following, if true, does most to explain the apparently surprising result?

A. Because of the need to educate the public about its new modelsâ€™ capabilities, Denomaâ€™s advertising spending was higher than normal over the period.
B. For the period at issue, Denomaâ€™s major competitors reported declines in revenue that were, in percentage terms, greater than Denomaâ€™s.
C. A significant proportion of Denomaâ€™s revenue comes from making components for other consumer-electronics manufacturers.
D. Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak.
E. During the period, consumer-electronics retailers sold remaining units of Denomaâ€™s superseded models at prices that were deeply discounted from those modelsâ€™ original prices.

Kudos [?]: 168 [0], given: 0

VP
Joined: 29 Dec 2005
Posts: 1338

Kudos [?]: 69 [0], given: 0

### Show Tags

28 Jan 2006, 07:23
C. A significant proportion of Denomaâ€™s revenue comes from making components for other consumer-electronics manufacturers.

Kudos [?]: 69 [0], given: 0

Manager
Joined: 15 Aug 2005
Posts: 198

Kudos [?]: 2 [0], given: 0

Location: New York

### Show Tags

28 Jan 2006, 07:31
C.

A significant proportion of Denomaâ€™s revenue comes from making components for other consumer-electronics manufacturers.

Sales to these consumer-electronics manufacturers dropped significantly, while sales increase in Denoma models didn't have significant impact on the company's overall revenues.

Kudos [?]: 2 [0], given: 0

Current Student
Joined: 29 Jan 2005
Posts: 5206

Kudos [?]: 434 [0], given: 0

### Show Tags

28 Jan 2006, 07:56
This mind bender took me almost 5 minutes to solve. At last I came to the conclusion that the answer must be (C) by POE and logic. If a significant portion of their sales come from components sales to other competing consumer electronics firms, then it logically follows that they have lost revenue because of the industry wide decrease in sales.

Kudos [?]: 434 [0], given: 0

SVP
Joined: 14 Dec 2004
Posts: 1681

Kudos [?]: 168 [0], given: 0

### Show Tags

28 Jan 2006, 08:02
Good work The OA I have is "C".
But in one of the previous posts, the OA is "E"

I think it should be "C"

Kudos [?]: 168 [0], given: 0

Intern
Joined: 24 Jan 2006
Posts: 24

Kudos [?]: 2 [0], given: 0

### Show Tags

31 Jan 2006, 04:40
I think its (E)

As the sales revenue have declined for Denoma also, but the argument also says that retailers have said "sales revenue from Denoma models actually grew" this means more number of Denoma models had been sold.
Option (E) states - "During the period, consumer-electronics retailers sold remaining units of Denomaâ€™s superseded models at prices that were deeply discounted from those modelsâ€™ original prices."

Which includes explanation of decreasing Denoma revenues as no new purchases were made by retailers from Denoma but they sold remaining sets, also since a higher no. of units were sold this explains why retailers had higher revenue from Denoma products

Kudos [?]: 2 [0], given: 0

VP
Joined: 20 Sep 2005
Posts: 1016

Kudos [?]: 38 [0], given: 0

### Show Tags

31 Jan 2006, 17:09
I believe it's E.

During the period, consumer-electronics retailers sold remaining units of Denomaâ€™s superseded models at prices that were deeply discounted from those modelsâ€™ original prices.

This explains the higher revenue from the selling the newer models but the loss of revenue from selling older models.

Kudos [?]: 38 [0], given: 0

Director
Joined: 26 Sep 2005
Posts: 571

Kudos [?]: 24 [0], given: 0

Location: Munich,Germany

### Show Tags

31 Jan 2006, 23:30
E for me as well.

C could attempt to explian only a part of the story- that Denoma makes products for other companies and due to a slump its sales suffered but doesnt explain why the retailers should enjoy higher Denoma product sales

whereas E, makes it clear- during the sales lsump, the retailers sold other models of Denoma products at a steep disc- which increased their sales and on the other hand, the slump contributed to declining sales of Denoma.

my \$0.02

Kudos [?]: 24 [0], given: 0

Senior Manager
Joined: 11 Jan 2006
Posts: 266

Kudos [?]: 4 [0], given: 0

Location: Chennai,India

### Show Tags

01 Feb 2006, 12:42
i think it is E too !

its where they say that the price is actually low so even when the revenue for the retailers is high the producer suffer !

700s club... vivek , prof GMATT73 can u guys tell y u ppl preferred C to E ?
_________________

vazlkaiye porkalam vazltuthan parkanum.... porkalam maralam porkalthan maruma

Kudos [?]: 4 [0], given: 0

01 Feb 2006, 12:42
Display posts from previous: Sort by