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20 Aug 2011, 00:03
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The cost of gas-burning grills has dropped nearly 40% in the last year, prompting an increase in sales. Hank’s Hardware responded to the popularity of gas grills with large displays and deeply-discounted sale prices. Sales of gas grills at Hank’s Hardware went up by a third, but at the end of the quarter managers were shocked to find they had lost money on gas grills.
Which of the following, if true, is the best explanation for why Hank’s Hardware’s profits on gas grills are suffering?
A. Sales volume has been miscalculated, surprising managers with a loss in profits.
B. The further discounts offered by sale prices account for a larger dollar amount than the increase in sales, leading to a loss of profits.
C. The reduction in cost is caused by shoddy construction, which is why many people who purchased gas grills are returning them, leading to a loss in profits.
D. Wood-burning grills are more popular than gas-grills; since Hank’s carries mostly gas grills, their profits are suffering
E. Customers only bought gas grills when they were on sale; once the sale was over, they stopped buying the grills, leading to a loss in profits.
OA: B.
But I selected A.
Explanation for answer not being A given is as below:
Sales volume has been miscalculated, surprising managers with a loss in profits.
But wait a min, does not the Question stem say "Which of the following, if true" ?
How can option A be out of scope ? When we have to consider it to be true .
Which of the following, if true, is the best explanation for why Hank’s Hardware’s profits on gas grills are suffering?
A. Sales volume has been miscalculated, surprising managers with a loss in profits.
B. The further discounts offered by sale prices account for a larger dollar amount than the increase in sales, leading to a loss of profits.
C. The reduction in cost is caused by shoddy construction, which is why many people who purchased gas grills are returning them, leading to a loss in profits.
D. Wood-burning grills are more popular than gas-grills; since Hank’s carries mostly gas grills, their profits are suffering
E. Customers only bought gas grills when they were on sale; once the sale was over, they stopped buying the grills, leading to a loss in profits.
OA: B.
But I selected A.
Explanation for answer not being A given is as below:
Sales volume has been miscalculated, surprising managers with a loss in profits.
But wait a min, does not the Question stem say "Which of the following, if true" ?
How can option A be out of scope ? When we have to consider it to be true .
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20 Aug 2011, 16:18
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Always trust the information given in argument. Anything not related to it will be out of scope.
Here the questions asks us to find an option which, if true, helps us find the missing link in argument.
And the missing link is, even when they thought they were doing 3 times their usual sales, why did they face loss.
So the answer we choose should contain something like "gave more discount that needed and ended up in loss"
Here the questions asks us to find an option which, if true, helps us find the missing link in argument.
And the missing link is, even when they thought they were doing 3 times their usual sales, why did they face loss.
So the answer we choose should contain something like "gave more discount that needed and ended up in loss"
20 Aug 2011, 22:54
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I think Option A is results which surprised the managers .but not the explanation for why Hank’s Hardware’s profits on gas grills are suffering
Option B provide the relevant information / explanation behind the loss.
Argument states that 40% drop in price, then again store managers added discount to it. So the added discount lead to loss in profits.
Option B provide the relevant information / explanation behind the loss.
Argument states that 40% drop in price, then again store managers added discount to it. So the added discount lead to loss in profits.
Archived Topic
Hi there,
Archived GMAT Club Tests question - no more replies possible.
Where to now? Try our up-to-date Free Adaptive GMAT Club Tests
for the latest questions.
Still interested? Check out the "Best Topics" block above for better discussion and related questions.
Thank you for understanding, and happy exploring!
