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14 Oct 2024, 10:11
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An internal financial report from the CFO
E-Design's sales and design divisions have performed with remarkable consistency over the past three years. In each of those years, operational costs for the design division have accounted for roughly 55 percent of fixed costs and 25 percent of variable costs while the sales division has accounted for 30 percent of fixed costs and 60 percent of variable costs.
E-Design's sales and design divisions have performed with remarkable consistency over the past three years. In each of those years, operational costs for the design division have accounted for roughly 55 percent of fixed costs and 25 percent of variable costs while the sales division has accounted for 30 percent of fixed costs and 60 percent of variable costs.
Each step performed by the sales division carries the same cost as each step performed by the design division.
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1. Which of the following, if true, would most strengthen the VP of Design's argument?
| Performance levels for the sales and design division have varied over the past three years. | |
| All of the products offered by the sales division are produced entirely by the design team. | |
| Most sales division activities cost up to twice as much as most design division activities. | |
| Each step performed by the sales division carries the same cost as each step performed by the design division. | |
| Total costs for each of the sales and design divisions have remained roughly constant. |
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Official Answer
Each step performed by the sales division carries the same cost as each step performed by the design division.
Attachment:
Flowchart Sales.jpg [ 36.08 KiB | Viewed 8171 times ]
15 Oct 2024, 12:30
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1. We are given the argument by the VP of Design: "It is my position that the sales division should thus be charged with more than 50% of associated costs, with a lower percentage attributed to the design division". Now it's asked to find the statement that best supports the argument.
2. Note that this argument is based on the fact that the sales division does more steps and therefore should be charged with more than 50% of associated costs. This is under the assumption that more steps means more costs associated.
3. Performance levels for the sales and design division have varied over the past three years. This is irrelevant because performance levels have no connection to costs. So, this statement doesn't support the argument best.
4. All of the products offered by the sales division are produced entirely by the design team. Here, this statement would still be irrelevant because it has no connection to costs. So, this statement doesn't support the argument best.
5. Most sales division activities cost up to twice as much as most design division activities. The key word is "most". That means there could be a design division activity that has a cost so high that overweighs all other costs and would weaken the argument. So, this statement doesn't support the argument best.
6. Each step performed by the sales division carries the same cost as each step performed by the design division. Since the sales division does more steps, that means they carry a higher cost overall than the design division. So, this statement does support the argument best.
7. Total costs for each of the sales and design divisions have remained roughly constant. Here, this statement is irrelevant because we're looking at the cost percentages which are relative. So, this statement doesn't support the argument best.
2. Note that this argument is based on the fact that the sales division does more steps and therefore should be charged with more than 50% of associated costs. This is under the assumption that more steps means more costs associated.
3. Performance levels for the sales and design division have varied over the past three years. This is irrelevant because performance levels have no connection to costs. So, this statement doesn't support the argument best.
4. All of the products offered by the sales division are produced entirely by the design team. Here, this statement would still be irrelevant because it has no connection to costs. So, this statement doesn't support the argument best.
5. Most sales division activities cost up to twice as much as most design division activities. The key word is "most". That means there could be a design division activity that has a cost so high that overweighs all other costs and would weaken the argument. So, this statement doesn't support the argument best.
6. Each step performed by the sales division carries the same cost as each step performed by the design division. Since the sales division does more steps, that means they carry a higher cost overall than the design division. So, this statement does support the argument best.
7. Total costs for each of the sales and design divisions have remained roughly constant. Here, this statement is irrelevant because we're looking at the cost percentages which are relative. So, this statement doesn't support the argument best.
11 Jun 2025, 05:14
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Hi, Isn't the argument as well linked with more than 50% increase in sales by the sales and delivery team??
Bismuth83
