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The Maxilux car company's design for its new luxury model, the Max 100

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The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 20 Apr 2020, 09:00
I guess OG gives a good explanation why (B) is not the correct answer:
"If winning the bid led Rubco to win more exclusive contracts with the Maxilux, that might help support the executives’ claim"

However, choice (B) does not tell us that winning this bid led Rubco to win more contracts. (B) just says that Rubco already has other contracts with Maxilux.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 25 May 2020, 06:33
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 27 May 2020, 01:53
shanks2020 wrote:
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.



Here is my take on why Option D is correct

As per Option D customers will get their worn out tyres replaced by purchasing Maxilux Company's tires so this will generate additional revenue and will lead to additional profits
Please note its focusing on same model- same design- same tyres whereas Option B is speaking about other models

As per Option B exclusive contracts may be a part of existing contract and may not contribute to additional revenue...Further Its speaking about other models and not about existing model's cost, profitability etc

Also in Option C even though production facilities and company's premised are close to each other it just provides logistic convenience

Option A was a strong contender but its not mentioned that spare tyre was part of bid or not

Option E is eliminated as it only speaks about criteria

Hope my explanation helps buddy

Please give kudos if this helps :)
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 27 May 2020, 02:32
vasuca10 wrote:
shanks2020 wrote:
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.



Here is my take on why Option D is correct

As per Option D customers will get their worn out tyres replaced by purchasing Maxilux Company's tires so this will generate additional revenue and will lead to additional profits
Please note its focusing on same model- same design- same tyres whereas Option B is speaking about other models

As per Option B exclusive contracts may be a part of existing contract and may not contribute to additional revenue...Further Its speaking about other models and not about existing model's cost, profitability etc

Also in Option C even though production facilities and company's premised are close to each other it just provides logistic convenience

Option A was a strong contender but its not mentioned that spare tyre was part of bid or not

Option E is eliminated as it only speaks about criteria

Hope my explanation helps buddy

Please give kudos if this helps :)


You are right about option D, when it comes to revenue. But we are concerned with profits. How can we say that generating additional revenue will lead to higher profits?
More revenue can also mean more costs, hence same profits.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 27 May 2020, 02:39
1
shanks2020 wrote:
vasuca10 wrote:
shanks2020 wrote:
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.



Here is my take on why Option D is correct

As per Option D customers will get their worn out tyres replaced by purchasing Maxilux Company's tires so this will generate additional revenue and will lead to additional profits
Please note its focusing on same model- same design- same tyres whereas Option B is speaking about other models

As per Option B exclusive contracts may be a part of existing contract and may not contribute to additional revenue...Further Its speaking about other models and not about existing model's cost, profitability etc

Also in Option C even though production facilities and company's premised are close to each other it just provides logistic convenience

Option A was a strong contender but its not mentioned that spare tyre was part of bid or not

Option E is eliminated as it only speaks about criteria

Hope my explanation helps buddy

Please give kudos if this helps :)


You are right about option D, when it comes to revenue. But we are concerned with profits. How can we say that generating additional revenue will lead to higher profits?
More revenue can also mean more costs, hence same profits.




We already know that the bid would "just cover Rubco's costs." We have no reason to believe that Rubco is losing money on this bid. The conclusion we're trying to explain is that Rubco will make a profit as a result of winning the bid.


This choice implies that in addition to providing tires to Maxilux at the price in their bid, Rubco can expect to sell replacement tires to people who purchase the Max 100. These replacement tires are not part of the bid, so they can be sold at a different price. That's why Rubco could make a profit by winning the bid, even if analysts are correct that the company will only just cover their costs in supplying the tires to Maxilux. (D) is correct.

Hope this explanation helps buddy :)

Please do give kudos if this helps :)
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 27 May 2020, 07:21
vasuca10 wrote:
shanks2020 wrote:
vasuca10 wrote:
shanks2020 wrote:
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.



Here is my take on why Option D is correct

As per Option D customers will get their worn out tyres replaced by purchasing Maxilux Company's tires so this will generate additional revenue and will lead to additional profits
Please note its focusing on same model- same design- same tyres whereas Option B is speaking about other models

As per Option B exclusive contracts may be a part of existing contract and may not contribute to additional revenue...Further Its speaking about other models and not about existing model's cost, profitability etc

Also in Option C even though production facilities and company's premised are close to each other it just provides logistic convenience

Option A was a strong contender but its not mentioned that spare tyre was part of bid or not

Option E is eliminated as it only speaks about criteria

Hope my explanation helps buddy

Please give kudos if this helps :)


You are right about option D, when it comes to revenue. But we are concerned with profits. How can we say that generating additional revenue will lead to higher profits?
More revenue can also mean more costs, hence same profits.




We already know that the bid would "just cover Rubco's costs." We have no reason to believe that Rubco is losing money on this bid. The conclusion we're trying to explain is that Rubco will make a profit as a result of winning the bid.


This choice implies that in addition to providing tires to Maxilux at the price in their bid, Rubco can expect to sell replacement tires to people who purchase the Max 100. These replacement tires are not part of the bid, [highlight]so they can be sold at a different price. That's why Rubco could make a profit by winning the bid, even if analysts are correct that the company will only just cover their costs in supplying the tires to Maxilux. (D) is correct.

Hope this explanation helps buddy :)

Please do give kudos if this helps :)


The different price is the one that causes the confusion. We are assuming that that price should be higher to get a net profit. But there is a possibility that replacement tire could be sold at the same bid price, which would be just enough to cover the costs.
I am not sure why it is correct to assume a higher than bid price here, since we are taught not to assume anything when it comes to these type of CR questions.
Or is there any link which I am missing that is given in the argument?
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 27 May 2020, 07:41
shanks2020 wrote:
vasuca10 wrote:
shanks2020 wrote:
vasuca10 wrote:
shanks2020 wrote:
option D will be correct only if we are given the connection that the replacement price will be higher than bid price. Though we are sure that revenue would increase, we are not sure about the profits.



Here is my take on why Option D is correct

As per Option D customers will get their worn out tyres replaced by purchasing Maxilux Company's tires so this will generate additional revenue and will lead to additional profits
Please note its focusing on same model- same design- same tyres whereas Option B is speaking about other models

As per Option B exclusive contracts may be a part of existing contract and may not contribute to additional revenue...Further Its speaking about other models and not about existing model's cost, profitability etc

Also in Option C even though production facilities and company's premised are close to each other it just provides logistic convenience

Option A was a strong contender but its not mentioned that spare tyre was part of bid or not

Option E is eliminated as it only speaks about criteria

Hope my explanation helps buddy

Please give kudos if this helps :)


You are right about option D, when it comes to revenue. But we are concerned with profits. How can we say that generating additional revenue will lead to higher profits?
More revenue can also mean more costs, hence same profits.




We already know that the bid would "just cover Rubco's costs." We have no reason to believe that Rubco is losing money on this bid. The conclusion we're trying to explain is that Rubco will make a profit as a result of winning the bid.


This choice implies that in addition to providing tires to Maxilux at the price in their bid, Rubco can expect to sell replacement tires to people who purchase the Max 100. These replacement tires are not part of the bid, [highlight]so they can be sold at a different price. That's why Rubco could make a profit by winning the bid, even if analysts are correct that the company will only just cover their costs in supplying the tires to Maxilux. (D) is correct.

Hope this explanation helps buddy :)

Please do give kudos if this helps :)


The different price is the one that causes the confusion. We are assuming that that price should be higher to get a net profit. But there is a possibility that replacement tire could be sold at the same bid price, which would be just enough to cover the costs.
I am not sure why it is correct to assume a higher than bid price here, since we are taught not to assume anything when it comes to these type of CR questions.
Or is there any link which I am missing that is given in the argument?




Buddy we are not assuming things here as bid price is already covering all the costs so ultimately it is a profitable venture

Secondly replacement tires are not a part of bid so it will generate additional revenue and thereby additional profits .....Costs are already covered in the bid price so we need not to worry about the cost portion.....

Hope this helps :)
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Re: The Maxilux car company's design for its new luxury model, the Max 100   [#permalink] 27 May 2020, 07:41

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