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Eton Company, an auto parts manufacturer, wants to extend

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Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 17 Jun 2017, 11:53
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Eton Company, an auto parts manufacturer, wants to extend its network of suppliers to include Applia, a maker of a new type of ball bearing. Eton estimates that the new ball bearing will increase the operational efficiency of its steering unit by 30%. Therefore, executives of Eton believe that adding Applia to its list of suppliers will help improve Eton's profitability.

Which of the following would be most useful to investigate to determine whether the new relationship with Applia will contribute to Eton Company's steering unit?
A. Will the new cost to purchase the new ball bearing from Applia exceed the cost of the ball bearing currently used to manufacture Eton Company's steering unit?
B. Do the buyers of Eton Company's steering units currently seek steering units with improved operational efficiency?
C. Are end users who might buy the improved steering unit aware that Eton Company is currently developing such a technology?
D. Are Eton company executives aware of current broader trends in the automobile industry, including the design and manufacture of new automobile models?
E. Will the cost to purchase the new ball bearing offset the new revenue likely to be gained from the distribution of steering units equipped with the new ball bearings?
[Reveal] Spoiler: OA

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Re: Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 17 Jun 2017, 12:49
E it is...E tells us whether it will be profitable to get new ball bearings. If revenue is greater than cost - Yes, if revenue less than cost - No.

Eton Company, an auto parts manufacturer, wants to extend its network of suppliers to include Applia, a maker of a new type of ball bearing. Eton estimates that the new ball bearing will increase the operational efficiency of its steering unit by 30%. Therefore, executives of Eton believe that adding Applia to its list of suppliers will help improve Eton's profitability.

Which of the following would be most useful to investigate to determine whether the new relationship with Applia will contribute to Eton Company's steering unit?
A. Will the new cost to purchase the new ball bearing from Applia exceed the cost of the ball bearing currently used to manufacture Eton Company's steering unit?
B. Do the buyers of Eton Company's steering units currently seek steering units with improved operational efficiency?
C. Are end users who might buy the improved steering unit aware that Eton Company is currently developing such a technology?
D. Are Eton company executives aware of current broader trends in the automobile industry, including the design and manufacture of new automobile models?
E. Will the cost to purchase the new ball bearing offset the new revenue likely to be gained from the distribution of steering units equipped with the new ball bearings?
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Re: Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 05 Sep 2017, 08:54
Chets25 wrote:
E it is...E tells us whether it will be profitable to get new ball bearings. If revenue is greater than cost - Yes, if revenue less than cost - No.

Eton Company, an auto parts manufacturer, wants to extend its network of suppliers to include Applia, a maker of a new type of ball bearing. Eton estimates that the new ball bearing will increase the operational efficiency of its steering unit by 30%. Therefore, executives of Eton believe that adding Applia to its list of suppliers will help improve Eton's profitability.

Which of the following would be most useful to investigate to determine whether the new relationship with Applia will contribute to Eton Company's steering unit?
A. Will the new cost to purchase the new ball bearing from Applia exceed the cost of the ball bearing currently used to manufacture Eton Company's steering unit?
B. Do the buyers of Eton Company's steering units currently seek steering units with improved operational efficiency?
C. Are end users who might buy the improved steering unit aware that Eton Company is currently developing such a technology?
D. Are Eton company executives aware of current broader trends in the automobile industry, including the design and manufacture of new automobile models?
E. Will the cost to purchase the new ball bearing offset the new revenue likely to be gained from the distribution of steering units equipped with the new ball bearings?



can you please tell me what is wrong with A?
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Re: Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 29 Oct 2017, 21:19
Skywalker18 wrote:
Eton Company, an auto parts manufacturer, wants to extend its network of suppliers to include Applia, a maker of a new type of ball bearing. Eton estimates that the new ball bearing will increase the operational efficiency of its steering unit by 30%. Therefore, executives of Eton believe that adding Applia to its list of suppliers will help improve Eton's profitability.

Which of the following would be most useful to investigate to determine whether the new relationship with Applia will contribute to Eton Company's steering unit?
A. Will the new cost to purchase the new ball bearing from Applia exceed the cost of the ball bearing currently used to manufacture Eton Company's steering unit?
B. Do the buyers of Eton Company's steering units currently seek steering units with improved operational efficiency?
C. Are end users who might buy the improved steering unit aware that Eton Company is currently developing such a technology?
D. Are Eton company executives aware of current broader trends in the automobile industry, including the design and manufacture of new automobile models?
E. Will the cost to purchase the new ball bearing offset the new revenue likely to be gained from the distribution of steering units equipped with the new ball bearings?


Hi Skywalker18,
Both options A & E avoid the long terms benefits as purchasing the equipment is a one time cost.
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Re: Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 22 Jan 2018, 10:35
A. Will the new cost to purchase the new ball bearing from Applia exceed the cost of the ball bearing currently used to manufacture Eton Company's steering unit?
-Trap Answer. New ball bearing might cost more, but the sale price might also exceed, leading to profit. No definite answer.
B. Do the buyers of Eton Company's steering units currently seek steering units with improved operational efficiency?
-Buyers might currently seek efficiency, but may or may not be willing to pay extra for it. This doesn't guarantee a profit. No definite answer.
C. Are end users who might buy the improved steering unit aware that Eton Company is currently developing such a technology?
-Irrelevant. They do not need to be aware.
D. Are Eton company executives aware of current broader trends in the automobile industry, including the design and manufacture of new automobile models?
-Irrelevant.
E. Will the cost to purchase the new ball bearing offset the new revenue likely to be gained from the distribution of steering units equipped with the new ball bearings?
-Yes. If sale price is more than cost price, then profit will be earned.
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Re: Eton Company, an auto parts manufacturer, wants to extend [#permalink]

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New post 22 Jan 2018, 11:05
E is a winner.Aptly explained above by Rahul.


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Re: Eton Company, an auto parts manufacturer, wants to extend   [#permalink] 22 Jan 2018, 11:05
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Eton Company, an auto parts manufacturer, wants to extend

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