The table summarizes total sales information for a large production co

Official Explanation

Step 1: Understand the Prompt and Question

The accompanying blurb explains that the table provides total and percent of sales numbers across six months. It also explains why the Automotive division seemingly had no sales in January and February: because that division was acquired in March.

The Total column shows a significant jump in March, corresponding with the acquisition of the new division. Other than that, sales are generally increasing, though May shows a drop. The percentages for Electronics and Housewares drop in March, but this occurs because a third division is added; sales in dollars haven’t necessarily dropped in the other two divisions, just their share of total sales.

This fact—that a new division was acquired partway through the period—means the data is going to be a little odd. Make a note to yourself to be especially careful with any questions that ask you to bridge the pre- and post-acquisition periods—perhaps jot down Feb and Mar on your scratch paper as your reminder. You may have to do some calculations in order to be able to compare the numbers in a meaningful way.

For each of the following statements, select Would help explain if the statement would, if true, help explain some of the information in the table. Otherwise, select Would not help explain.

The if true language in the question stem sends a specific message: You are supposed to accept each statement as true. In other words, your job here is not to decide whether the statement is true. Rather, assuming already that the statement is true, does that statement help to explain some portion of the data that you see in the table?

Here’s the first statement:

Consumer purchases of electronics typically drop just after the month of December, but they revive within two to three months.

Step 2: Plan Your Approach

Just after the month of December would be January, and January is included in the data. The statement is limited to the Electronics division.

Assume that this statement is true. If so, what would you expect to see in the data? It should be the case that January and possibly February Electronics revenues should be lower and then the numbers should increase possibly in February and certainly in March. Check the data to see whether this trend exists.

Ah, but the table doesn’t show revenues just for the Electronics division. It shows total revenues and then the percentage of those revenues attributed to each division. So you are going to need to do some calculating to see what’s happening with the revenues in this one division.

Step 3: Solve the Problem

From January to February, you have only the two data points (Electronics and Housewares), so you can eyeball the numbers. The Electronics percentage for February increased month-over-month, as did total sales, so Electronics purchases did go up from January to February. Did they go up in March as well?

In March, the Electronics percentage was 34.19%, or approximately 1/3 of total revenues. Revenues were $6,561, or approximately $6,600, so a third is about $2,200. (Note: The revenues are in thousands in the table—that is, revenue was really about $6.561 million—but you can ignore that detail when you’re just trying to figure out whether revenue increased or decreased.)

Total revenues in February were about $4,200 and Electronics represented 49.75% of that, or about 50%. So February revenues were about $2,100.

If you feel that the numbers are so close ($2,100 and $2,200) that your estimations could be in error, pop up the calculator and calculate the figure for which you had to estimate more heavily—in this case, March. Jot down the calculation first on your scrap paper: (6,600)(0.3419). The value is $2,243 (and change), so yes, it is the case that revenue increased in March.

Overall, revenue went up both from January to February and from February to March.

For March to April, you now have all three divisions in the mix, so you can eyeball again. Electronics increased its percentage share and total revenues increased, so Electronics went up yet again in this period.

This statement does explain what’s happening with the data for the Electronics division.

The correct answer for statement 1 is Would help explain.

Repeat the process steps as you work through the second and third statements. Here’s the second statement:

Companies that have electronics, housewares, and automotive product lines tend to have higher total sales in housewares than do companies that sell only one or two of these product lines.

Hmm. If a company sells all three lines, then it tends to sell more in housewares than does a company with only one or two of these lines. This prompt is only about one company, though, so how can you tell anything about a company that sells only one or two of these product lines?

Wait! For the first two months of the period shown in the table, this company did sell only two of these product lines. So compare the company to itself, pre- and post-acquisition.

In this case, it isn’t necessary to sort the data at all, but you will have to do a little number crunching:

In February, Housewares had about 50% of sales, or about $2,100 (you can continue to ignore the thousands designation). It had a slightly higher percentage share in January, but total sales were $300 lower that month, so the dollar amount for Housewares in January was lower than in February.

In March, the automotive business was acquired. Now, Housewares dropped to 33% of total sales, but of a larger base: $6,561. Approximately one-third of that figure is about $2,200, so Housewares sales did grow from February to March.

In April, Housewares increased its share of sales and total revenues increased, so housewares was again greater in April than in February. Likewise, in both May and June, Housewares had a greater share than in March and total revenues were greater than in March, so the trend continues.

The correct answer for statement 2 is Would help explain.

Here’s the third statement:

The Housewares division took a $1.1 million loss in March due to an accounting change.

Don’t jump straight to the data and start calculating anything. Understand first. This statement talks about a loss, but the data in the table is entirely about revenues. A loss is a cost; it would be reflected in profits, not in revenues. So the data in the table can’t help to explain this cost.

Note: The GMAT doesn’t expect you to know about accounting—you’ll learn that in grad school!—but it does expect you to know that Profit = Revenue – Cost.

The correct answer for statement 3 is Would not help explain.