The Tulips electronics manufacturer came out with a revamped version

Question

The Tulips electronics manufacturer came out with a revamped version of a radio they had once produced. The older model had excellent sound quality. The new version had a more attractive design and was fitted with a display screen. The management department was extremely pleased with the record-high sales figures produced by the new radio although the finance department claimed that the profit earned by the old radio in the same amount of time was higher by two-thirds.

Which of the following inferences is best supported by the statement made above?

Which of the following inferences is best supported by the statement made above?

(A) The screen fitted to the new radios increased its production cost, resulting in a lower profit.

(B) Although the new model was cheaper to produce, its marketing proved to be very expensive.

(C) The revenues earned by the old model were two-thirds higher than those earned by the new model.

(D) Although it had excellent sound quality, the older model cost Tulips less.

(E) Even though the sales figures of the new radio were extremely high, those enjoyed by the older model had been even higher.

This is a  CR Butler Question

Check the links to other Butler Projects:
 
  Data Sufficiency Butler  
  Problem Solving Butler  
  Sentence Correction Butler  
  Reading Comprehension Butler  
  Integrated Reasoning Butler

PeanutButter429 · Answer

I picked (A) here because a screen was mentioned in the question itself

JackyJan · Answer

I ended up with A and D - but in the end I decided to pick D!

We know that...
...the new radio has two new features.
...has "record-high" sales figures ("record-high" might imply that sales figures have never been this high)
...the old radio generated more PROFIT in the same amount of time (Revenue-Costs (old) > Revenue-Costs (new))

For the equation to hold,  even if  revenues would be same (revenue old shout be smaller than revenue new probably), then Costs (old) have to be smaller than costs (new)

Looking at the answer choices:
A) According to A the new screen led to higher costs -> This would make sense. But we can't really infer that the screen has to be the reason (it could also be another cost position)

D) "Old model cost less" -> this has to be an inference as discussed above (for the equation to hold, the costs (old) have to be smaller than costs (new))

As the inference of D is definitely stronger imo - I choose D

Bunuel  What do you think of my reasoning?

quamrepudiandae · Answer

I think the answer will be option c because it describe the sales of new and old ones correctly.

Sajjad1994 · Answer

Hi

C  is incorrect instead the official answer is  D.

anu12345678765 · Answer

Why will it not be C ??

The main crux was new model- doing well in sales no acc to the reps. 
However the older vesion made 2/3rd more revenue - account team. The same is said in option C

arushi118 · Answer

I am confused between A, B and D. 
A: Even if the production cost was higher for new radios - maybe the selling price was higher also -> so cannot comment on the low profit based on just high production cost.
B: we cannot comment on higher marketing cost as lesser profit for new radios could be because of lesser selling price also.
D: How can we say that the profit for old radio was more due to lesser cost price of the old radio -> It could also be the case that the selling price of old radio is much higher than the selling prices of new radio -> hence higher profit for old radio.

egmat · Answer

The correct answer is D

What we know from the passage 
 
 New radio: record-high sales figures but lower profit 
 Old radio: normal sales but higher profit (by two-thirds more)

Why A and B don't work
  Option A  claims the screen caused the lower profit. But how do we know it's specifically the screen? Maybe other things went wrong too. We can't prove this is THE reason.
 Option B  talks about marketing costs being expensive. The passage doesn't mention marketing at all. This is just a guess.

Why D is correct 
 The passage says the new radio had "record-high sales figures."
Sales figures means total revenue - the total money that came in.
So the new radio brought in MORE money than the old one.
But somehow... it made LESS profit.
Let that sink in for a moment.

You're bringing in MORE money but keeping LESS of it as profit.
Where did all that extra money go? It got eaten up by the costs of making the product.

If you earn more but profit less, your production costs must be way higher.
The new radio is expensive to produce. Which means the old radio was cheaper to produce.

That's exactly what D says - and it MUST be true based on the facts we have.

arushi118 · Answer

So does that mean that "record-high sales figures" means "high revenue "and not "high number of new radios sold"??

egmat · Answer

Yes, that's right.
 "Sales figures"  refers to  total revenue  - the total money that came in from sales.
It doesn't specifically tell us how many units were sold. It just tells us the total dollar amount was record-high.

SwethaReddyL · Answer

KarishmaB  - why is E not a right answer? is it because nowhere does the arg talks about people enjoyed much or less?

egmat · Answer

The passage says:  "record-high sales figures produced by the new radio"
 E claims:  "those enjoyed by the older model had been even higher"

"Enjoyed" here means "achieved/experienced"  (business term - like "the company enjoyed strong growth"). It's NOT about customer satisfaction.
 
So E is really saying: The old model achieved even higher sales figures than the new model.

T  he contradiction:  "Record-high" means the  highest ever . If the old model had higher sales, then the new model's sales couldn't be "record-high."
E directly contradicts an explicit fact in the passage.

OneLazyBum · Answer

We can only say that newer model costed more but we can't clearly point out which factor of it was responsible for it. It could be screen, some other hardware or software, marketing, etc.
Therefore, correct choice is  (D)

Bunuel · Answer

Official Explanation

The Tulips electronics manufacturer came out with a revamped version of a radio they had once produced. The older model had excellent sound quality. The new version had a more attractive design and was fitted with a display screen. The management department was extremely pleased with the record-high sales figures produced by the new radio although the finance department claimed that the profit earned by the old radio in the same amount of time was higher by two-thirds.

Which of the following inferences is best supported by the statement made above?

Which of the following inferences is best supported by the statement made above?

(A) The screen fitted to the new radios increased its production cost, resulting in a lower profit.

Incorrect.

This is an Inference question, so the argument is comprised of premises only, on which basis you are asked to draw a conclusion:

Premise A: The Tulips company have a new and old model of the same radio. The old model is no longer in production. 
 +
Premise B: The old model had excellent sound quality.
 +
Premise C: The new model was more attractive than the old one. The new model had a display screen.
 +
Premise D: The new model achieved the highest sales figures ever. However, it made fewer profits than the old model did in the same span of time.
 =
Conclusion: ?

Although it may be concluded that the new product's costs in general may have affected the profit, the cost of the screen specifically is not mentioned in any of the premises. Therefore, we simply do not have enough information to assign the blame for the rising costs specifically to the screen, rather than some other factor, and this conclusion goes too far from the information given.

(B) Although the new model was cheaper to produce, its marketing proved to be very expensive.

Incorrect.

This conclusion goes too far from the information given to us. Although it may be concluded that the new model's costs in general may have affected the profit, the cost of marketing the products specifically is not mentioned in any of the premises.

(C) The revenues earned by the old model were two-thirds higher than those earned by the new model.

Incorrect.

This conclusion contradicts Premise D. The word revenues indicates the total income created by the product. In this question, the phrase record-high sales figures represents the amount of revenue made by the new product, meaning the new product exceeded all its predecessors.

(D) Although it had excellent sound quality, the older model cost Tulips less.

When the question provides information on two out of the three parameters of revenue\profits\expenses questions (in this case, revenues and profit), this indicates the answer choice should revolve around the third parameter (expenses). In this case, the lower expenses of the older radio account for its higher profits.

The other dangerous answer choices here are A and B, as both of these answer choices also mention expenses. However, both A and B are less preferable as answer choices because they also make assumptions about precisely what those costs were. A says the screen of the new model was more expensive; B says the new model's marketing was more expensive. But the argument, on which the correct answer choice should rely, says nothing as specific as that - and mentions neither screens nor marketing. We simply do not have enough information to reach A or B as the conclusion - all we can really learn from the argument is that the expenses must have risen in general terms.

(E) Even though the sales figures of the new radio were extremely high, those enjoyed by the older model had been even higher.

Incorrect.

This is an Inference question, so the argument is comprised of premises only, on which basis you are asked to draw a conclusion:

Premise A: The Tulips company have a new and old model of the same radio. The old model is no longer in production. 
 +
Premise B: The old model had excellent sound quality.
 +
Premise C: The new model was more attractive than the old one. The new model had a display screen.
 +
Premise D: The new model achieved the highest sales figures ever. However, it made fewer profits than the old model did in the same span of time.
 =
Conclusion: ?

This conclusion contradicts Premise D. The phrase  record-high sales figures  means that none of their older product had ever sold more than the new one.

denzildsouza3661 · Answer

how would you arrive exactly to this number? its not stated there hence not the answer.

The Tulips electronics manufacturer came out with a revamped version

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

The Tulips electronics manufacturer came out with a revamped version

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards