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Excess inventory, a massive problem for many businesses, has several

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Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 19 Sep 2011, 23:11
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Question 1
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Question Stats:

82% (02:10) correct 18% (02:50) wrong based on 67

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Question 2
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43% (00:36) correct 57% (00:44) wrong based on 74

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Question 3
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51% (00:42) correct 49% (00:35) wrong based on 72

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Question 4
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57% (00:19) correct 43% (00:33) wrong based on 72

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Question 5
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69% (00:35) correct 31% (00:37) wrong based on 68

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Question 6
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76% (00:36) correct 24% (01:08) wrong based on 67

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Question 7
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44% (01:37) correct 56% (01:20) wrong based on 63

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Excess inventory, a massive problem for many businesses, has several causes, some of which are unavoidable. Overstocks may accumulate through production overruns or errors. Certain styles and colors prove unpopular. With some products—computers and software, toys, and books—last year’s models are difficult to move even at huge discounts. Occasionally the competition introduces a better product. But in many cases the public’s buying tastes simply change, leaving a manufacturer or distributor with thousands (or millions) of items that the fickle public no longer wants.

One common way to dispose of this merchandise is to sell it to a liquidator, who buys as cheaply as possible and then resells the merchandise through catalogs, discount stores, and other outlets. However, liquidators may pay less for the merchandise than it cost to make it. Another way to dispose of excess inventory is to dump it. The corporation takes a straight cost write-off on its taxes and hauls the merchandise to a landfill. Although it is hard to believe, there is a sort of convoluted logic to this approach. It is perfectly legal, requires little time or preparation on the company’s part, and solves the problem quickly. The drawback is the remote possibility of getting caught by the news media. Dumping perfectly useful products can turn into a public relations nightmare. Children living in poverty are freezing and XYZ Company has just sent 500 new snow-suits to the local dump. Parents of young children are barely getting by and QPS Company dumps 1,000 cases of disposable diapers because they have slight imperfections.

The managers of these companies are not deliberately wasteful; they are simply unaware of all their alternatives. In 1976 the Internal Revenue Service provided a tangible incentive for businesses to contribute their products to charity. The new tax law allowed corporations to deduct the cost of the product donated plus half the difference between cost and fair market selling price, with the proviso that deductions cannot exceed twice cost. Thus, the federal government sanctions—indeed, encourages—an above-cost federal tax deduction for companies that donate inventory to charity.

[Reveal] Spoiler:
C

1. The author mentions each of the following as a cause of excess inventory EXCEPT

(A) production of too much merchandise
(B) inaccurate forecasting of buyers’ preferences
(C) unrealistic pricing policies
(D) products’ rapid obsolescence
(E) availability of a better product


[Reveal] Spoiler:
B

2. The passage suggests that which of the following is a kind of product that a liquidator who sells to discount stores would be unlikely to wish to acquire?

(A) Furniture
(B) Computers
(C) Kitchen equipment
(D) Baby-care products
(E) Children’s clothing


[Reveal] Spoiler:
B

3. The passage provides information that supports which of the following statements?

(A) Excess inventory results most often from insufficient market analysis by the manufacturer.
(B) Products with slight manufacturing defects may contribute to excess inventory.
(C) Few manufacturers have taken advantage of the changes in the federal tax laws.
(D) Manufacturers who dump their excess inventory are often caught and exposed by the news media.
(E) Most products available in discount stores have come from manufacturers’ excess-inventory stock.


[Reveal] Spoiler:
E

4. The author cites the examples in lines 25-29 [Parents of young children are barely getting by and QPS Company dumps 1,000 cases of disposable diapers because they have slight imperfections.] most probably in order to illustrate

(A) the fiscal irresponsibility of dumping as a policy for dealing with excess inventory
(B) the waste-management problems that dumping new products creates
(C) the advantages to the manufacturer of dumping as a policy
(D) alternatives to dumping explored by different companies
(E) how the news media could portray dumping to the detriment of the manufacturer’s reputation


[Reveal] Spoiler:
A

5. By asserting that manufacturers “are simply unaware” (line 31), the author suggests which of the following?

(A) Manufacturers might donate excess inventory to charity rather than dump it if they knew about the provision in the federal tax code.
(B) The federal government has failed to provide sufficient encouragement to manufacturers to make use of advantageous tax policies.
(C) Manufacturers who choose to dump excess inventory are not aware of the possible effects on their reputation of media coverage of such dumping.
(D) The manufacturers of products disposed of by dumping are unaware of the needs of those people who would find the products useful.
(E) The manufacturers who dump their excess inventory are not familiar with the employment of liquidators to dispose of overstock.


[Reveal] Spoiler:
A

6. The information in the passage suggests that which of the following, if true, would make donating excess inventory to charity less attractive to manufacturers than dumping?

(A) The costs of getting the inventory to the charitable destination are greater than the above-cost tax deduction.
(B) The news media give manufacturers’ charitable contributions the same amount of coverage that they give dumping.
(C) No straight-cost tax benefit can be claimed for items that are dumped.
(D) The fair-market value of an item in excess inventory is 1.5 times its cost.
(E) Items end up as excess inventory because of a change in the public’s preferences.


[Reveal] Spoiler:
C

7. Information in the passage suggests that one reason manufacturers might take advantage of the tax provision mentioned in the last paragraph is that

(A) there are many kinds of products that cannot be legally dumped in a landfill
(B) liquidators often refuse to handle products with slight imperfections
(C) the law allows a deduction in excess of the cost of manufacturing the product
(D) media coverage of contributions of excess-inventory products to charity is widespread and favorable
(E) no tax deduction is available for products dumped or sold to a liquidator

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA
[Reveal] Spoiler: Question #5 OA
[Reveal] Spoiler: Question #6 OA
[Reveal] Spoiler: Question #7 OA

Last edited by hazelnut on 16 Dec 2017, 23:31, edited 5 times in total.
Edited the question.
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 20 Sep 2011, 09:24
please give OA
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 20 Sep 2011, 09:47
U can post your answers here..Then i will post OA..That way we can have a discussion on the answers..

If you dont mind..
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 24 Sep 2011, 02:05
6. The information in the passage suggests that which of
the following, if true, would make donating excess inv
entory to charity less attractive to manufacturers than
dumping?
(A) The costs of getting the inventory to the charitable
destination are greater than the above-cost tax
deduction.
(B) The news media give manufacturers’ charitable
contributions the same amount of coverage that they
give dumping.
(C) No straight-cost tax benefit can be claimed for items
that are dumped.
(D) The fair-market value of an item in excess inventory
is 1.5 times its cost.
(E) Items end up as excess inventory because of a
change in the public’s preferences.

7. Information in the passage suggests that one reason
manufacturers might take advantage of the tax provision
mentioned in the last paragraph is that
(A) there are many kinds of products that cannot be
legally dumped in a landfill
(B) liquidators often refuse to handle products with
slight imperfections
(C) the law allows a deduction in excess of the cost of
manufacturing the product
(D) media coverage of contributions of excess-inventory
products to charity is widespread and favorable
(E) no tax deduction is available for products dumped or
sold to a liquidator

Two more questions on the same..
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 11 Jan 2012, 06:59
c
b
b
e
a
a
c
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 25 Sep 2013, 09:33
dchow23 wrote:
c
b
b
e
a
a
c
DCSOSIK


Is this the OA? Seems pretty close, can only disagree in 3, but you may be right.
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 10 Jun 2015, 23:58
1. The author mentions each of the following as a cause of excess inventory EXCEPT
(A) production of ]too much merchandise > mentioned
(B) inaccurate forecasting of buyers’ preferences > mentioned
(C) unrealistic pricing policies. > not mentioned
(D) products’ rapid obsolescence > mentioned
(E) availability of a better product > mentioned

2. The passage suggests that which of the following is a kind of product that a liquidator who sells to discount stores would be unlikely to wish to acquire?
(A) Furniture
(B) Computers > 1st paragraph
(C) Kitchen equipment
(D) Baby-care products
(E) Children’s clothing

3. The passage provides information that supports which of the following statements?
(A) Excess inventory results most often from insufficient market analysis by the manufacturer.
(B) Products with slight manufacturing defects may contribute to excess inventory. > stated in the 1st paragraph
(C) Few manufacturers have taken advantage of the changes in the federal tax laws. > may be but we don't know.
(D) Manufacturers who dump their excess inventory are often caught and exposed by the news media.
(E) Most products available in discount stores have come from manufacturers’ excess-inventory stock.

4. The author cites the examples in lines 25-29 most probably in order to illustrate
(A) the fiscal irresponsibility of dumping as a policy for dealing with excess inventory
(B) the waste-management problems that dumping new products creates
(C) the advantages to the manufacturer of dumping as a policy
(D) alternatives to dumping explored by different companies
(E) how the news media could portray dumping to the detriment of the manufacturer’s reputation Clearly mentioned that how the news media distorts the picture

5. By asserting that manufacturers “are simply unaware” (line 31), the author suggests which of the following?
(A) Manufacturers might donate excess inventory to charity rather than dump it if they knew about the provision in the federal tax code.
(B) The federal government has failed to provide sufficient encouragement to manufacturers to make use of advantageous tax policies.
(C) Manufacturers who choose to dump excess inventory are not aware of the possible effects on their reputation of media coverage of such dumping. > they are
(D) The manufacturers of products disposed of by dumping are unaware of the needs of those people who would find the products useful.
(E) The manufacturers who dump their excess inventory are not familiar with the employment of liquidators to dispose of overstock. > out of the view

6. The information in the passage suggests that which of the following, if true, would make donating excess inventory to charity less attractive to manufacturers than dumping?
(A) The costs of getting the inventory to the charitable destination are greater than the above-cost tax deduction. > directly mentioned
(B) The news media give manufacturers’ charitable contributions the same amount of coverage that they give dumping.
(C) No straight-cost tax benefit can be claimed for items that are dumped.
(D) The fair-market value of an item in excess inventory is 5 times its cost.
(E) Items end up as excess inventory because of a change in the public’s preferences.

7. Information in the passage suggests that one reason manufacturers might take advantage of the tax provision mentioned in the last paragraph is that
(A) there are many kinds of products that cannot be legally dumped in a landfill
(B) liquidators often refuse to handle products with slight imperfections
(C) the law allows a deduction in excess of the cost of manufacturing the product > directly stated
(D) media coverage of contributions of excess-inventory products to charity is widespread and favorable
(E) no tax deduction is available for products dumped or sold to a liquidator
_________________

Thank you

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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 08 Aug 2017, 22:19
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NaeemHasan wrote:
2. The passage suggests that which of the following is a
kind of product that a liquidator who sells to discount
stores would be unlikely to wish to acquire?
(A) Furniture
(B) Computers
(C) Kitchen equipment
(D) Baby-care products
(E) Children’s clothing

Where does the answer of this question lie?


Answer to this lies in the first para - "With some products - computers and software, toys and books - last year's models are difficult to move even at huge discounts"
Thus, it is unlikely that a liquidator will acquire computers.
Good question!
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 06 Nov 2017, 02:29
iamdp wrote:

3. The passage provides information that supports which of the following statements?
(A) Excess inventory results most often from insufficient market analysis by the manufacturer.
(B) Products with slight manufacturing defects may contribute to excess inventory. > stated in the 1st paragraph
(C) Few manufacturers have taken advantage of the changes in the federal tax laws. > may be but we don't know.
(D) Manufacturers who dump their excess inventory are often caught and exposed by the news media.
(E) Most products available in discount stores have come from manufacturers’ excess-inventory stock.



I find it a bit confusing - in fact, the author states that "The managers of these companies are not deliberately wasteful; they are simply unaware of all their alternatives" and then goes in detail about tax incentives as for me it clearly implied that C is a valid choice! I agree that A is a valid choice as well, but really these two A and C are both supported in the passage
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 01 Feb 2018, 03:21
Erjan_S wrote:
iamdp wrote:

3. The passage provides information that supports which of the following statements?
(A) Excess inventory results most often from insufficient market analysis by the manufacturer.
(B) Products with slight manufacturing defects may contribute to excess inventory. > stated in the 1st paragraph
(C) Few manufacturers have taken advantage of the changes in the federal tax laws. > may be but we don't know.
(D) Manufacturers who dump their excess inventory are often caught and exposed by the news media.
(E) Most products available in discount stores have come from manufacturers’ excess-inventory stock.



I find it a bit confusing - in fact, the author states that "The managers of these companies are not deliberately wasteful; they are simply unaware of all their alternatives" and then goes in detail about tax incentives as for me it clearly implied that C is a valid choice! I agree that A is a valid choice as well, but really these two A and C are both supported in the passage


If you carefully read the first paragraph, we can see that the one of the factors mentioned is the changing consumer preference.this doesn't imply that the market analysis was insufficient. It was simple because the consumer was fickle minded.

As for C, we don't know anything about companies that do use this provision. it simply talks about the companies that dump. It could be that none of the companies are using that provision in which case C is wrong. Or it could be that few companies are already using that provision which makes C deducible. Hence we can't properly infer C
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Re: Excess inventory, a massive problem for many businesses, has several [#permalink]

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New post 02 Feb 2018, 10:22
I got all correct within 10 mins and 30 seconds, is that alright? or do i need to be faster?
Re: Excess inventory, a massive problem for many businesses, has several   [#permalink] 02 Feb 2018, 10:22
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