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# RAGCT Day 17: In 1987, Fabrico, a clothing manufacturer

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Intern
Joined: 07 May 2014
Posts: 27
Concentration: Strategy, Technology
Schools: Anderson '17
GMAT 1: 730 Q50 V40
GPA: 3.1
WE: Analyst (Consulting)
Re: RAGCT Day 17: In 1987, Fabrico, a clothing manufacturer  [#permalink]

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08 Oct 2014, 06:56
IMO C

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Joined: 15 Nov 2015
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Re: RAGCT Day 17: In 1987, Fabrico, a clothing manufacturer  [#permalink]

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22 Mar 2016, 06:41
Scenario 1 : Sales Increased
Scenario 2: Demand is down
One way sales increase even with demand down is if the price has been marked up by the company. In other words the sales in terms of \$ increased even though the company sold fewer items.
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Re: RAGCT Day 17: In 1987, Fabrico, a clothing manufacturer  [#permalink]

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10 Apr 2017, 19:17
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souvik101990 wrote:
In 1987, Fabrico, a clothing manufacturer, sold a total of 2.3 million dollars’ worth of clothing, a 17 percent increase over 1986 sales. In January 1988, however, Fabrico closed one of its clothing factories, citing reduced demand for its products as the major reason.

Which one of the following, if true about 1987, contributes most to a resolution of the apparent discrepancy between the sales figures and the reason offered for closing a factory?

(A) The total worldwide dollar value of clothing sales by manufacturers increased by 5 percent over sales in 1986.

(B) Fabrico’s employees dropped earlier demands for a 25 percent increase in company-paid benefits and a 15 percent increase in hourly wages.

(C) Because of escalating costs for raw materials, prices charged by Fabrico for its products were on average 42 percent higher than they were in 1986.

(D) Fabrico introduced several new styles of clothing that were generally praised by fashion critics and that sold very well.

(E) Fabrico spent less on capital improvements than it did in 1986, when it added new plant capacity and new equipment.

General Description: This question asks you to find the response that would resolve the apparent discrepancy described in the passage. To answer this question, you must understand just what makes the evidence cited into an apparent discrepancy: What is the problem that the correct response will solve?

A. Incorrect. This information about the total market for clothing sales does not help resolve a discrepancy in the behavior of one particular clothing manufacturer.

B. Incorrect. Without further information, it is impossible to know how the employees' demands bear on the situation described in the passage. Even with further information, it is difficult to see how response (B) could bear on the second part of the discrepancy in the passage (closing the factory in response to reduced demand).

C. Correct. If the selling prices for Fabrico's products were 42 percent higher in 1987 than in 1986, but the total dollar amount of Fabrico's sales were only 17 percent higher in 1987 than in 1986, that suggests that Fabrico actually sold less clothing in 1987 than in 1986. Thus it is not surprising that Fabrico would close a factory in January 1988 because of reduced demand. Response (C) shows how both pieces of information in the passage could be true; that is, it resolves the discrepancy and is the best answer.

D. Incorrect. This statement could help explain the first part of the discrepancy (increased sales), but if anything, it makes the second part (closing the factory in response to reduced demand) even more mysterious.

E. Incorrect. The amount Fabrico spends on capital improvements has an impact on its overall profit, but overall profit is not at issue in the passage: The apparent discrepancy is that Fabrico has increased sales of its products and yet claims that demand for those products is reduced.

Difficulty Level: Relatively easy

Tips and Pitfalls: In answering a question about resolving the discrepancy between two pieces of information, remember that the correct answer must explain both pieces of information. An answer that explains only one of the pieces of information is a tempting choice, but cannot be the correct answer to a question that asks you to resolve a discrepancy.
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Re: RAGCT Day 17: In 1987, Fabrico, a clothing manufacturer &nbs [#permalink] 10 Apr 2017, 19:17

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