krndatta wrote:
AndrewN Share your two cents on my reasoning.
Checking with variance test:-
Option A:- Yes, the company does have new and profitable products. Then the CFO's decision is warranted because the company does have new and profitable products.
On the other hand a "No" to the above question would mean the company doesn't have new and profitable products. So the decision is not warranted.
Option C:- Yes, there might be some features that could be added to the product, but we don't know what the final price would be. So we can't say whether the decision is warranted or not.
A "No" would make our conclusion stronger since there are no additional features that can be added, and the consumers are not willing to pay extra. Hence, the conclusion stands strengthened.
Option D:- This is the correct answer.
Option E:- This is incorrect because this option talks about revenues, and our concern is profits. Even if we get to know that the revenues are a 100%, but then too the expenditure or the input costs can be way over. So doesn't impact the conclusion or doesn't tell us whether the decision is warranted or not.
My other thought on this one was if lets say maximum revenue comes from this flagship product, then the decision might not be warranted. But then I thought even if maximum revenue comes from this product, then too this product is a loss making product. So doesn't matter whether the decision is warranted or not.
Share your thoughts on my reasoning above.
Thanks
Hello again,
krndatta. You have to be careful on
evaluate questions not to get carried away in an assay of each answer choice. I like the scientific mindset, but I am afraid that a strict variance test analysis such as the one you have outlined above is too much trouble for answering a GMAT™ question. By your logic, (A) is as strong an answer as (D)—if the decision is or is not warranted based on what (A) tells us, then it seems quite useful in evaluating the argument. But there is an overarching problem with (A). Look at the question stem carefully:
Quote:
The answer to which of the following questions would be most useful in evaluating whether the CFO's decision to divest the company of its flagship product is warranted?
The existence or absence of
any other product besides the flagship product falls outside the scope of the recommendation made by the CFO. That recommendation is based on the company
producing this product at a profit. Answer choice (A) puts shiny new toys in front of us while effectively sidestepping the issue. Thus, it cannot be the answer we are seeking.
Your read on answer choice (C) is spot on:
we don't know what the final price would be. End of story. (We cannot speculate on profit margins.)
Answer choice (E) reminds me of the same type of answer on another recent question you asked me about, namely in that it invokes a
percentage or proportion when the issue at stake is much simpler: can the company turn a profit on this flagship product? We do not need to know whether that product comprises 10 percent or 95 percent of company profits... if the answer choice did even discuss profits rather than revenues, as you correctly pointed out.
In short, you seem to be developing a keener eye on these tough questions. Just remember not to caught up in pursuing a side thought when the questions are always designed (that is, when they are official) with a linear, straight-arrow logic in mind.
Thank you for thinking to ask, and good luck with your studies.
- Andrew