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# V03-13

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Math Expert
Joined: 02 Sep 2009
Posts: 47978

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16 Sep 2014, 01:59
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35% (medium)

Question Stats:

62% (01:16) correct 38% (03:21) wrong based on 21 sessions

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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.

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16 Sep 2014, 01:59
Official Solution:

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.

Situation:After sales of gas grills have increased by a sizable percentage, the managers of Hank’s Hardware are surprised to notice a loss in overall profits.

Reasoning: Which of these is the best explanation for the loss in overall profits?The increase in the number of grills sold is only one factor to keep in mind. The price of grills has gone down, and this loss in income has been compounded by sale prices on the grills. If the managers of Hank’s Hardware offered sale prices that were too deeply discounted, they would lose money even if more grills were being sold.
1. Outside the scope of the question. While it is possible managers miscalculated sales volume, it is not discussed in the passage.
2. This option correctly identifies the potential of money lost to discounts outweighing money gained by larger sales volume.
3. The passage does not mention either that construction is shoddy or that customers are returning the grills.
4. The passage does not compare the relative popularity of wood- and gas-burning grills.
5. It may be true that customers stopped buying grills after they were no longer on sale, but this answer choice does not offer an explanation for the loss in profits.

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Joined: 11 Oct 2014
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13 Feb 2018, 21:15
Why can't the answer to this be C? If all the information mentioned in the 5 options can be considered to be true, then how do we rule out C?
B mentions that the "future discounts" caused a loss of money. Probably the future discounts were a lot more than the current discounts.
If you go by C, it says that many people returned the grills back to the store. This could also cause a loss if money, since the store must have calculated only the number of pieces sold and not the number of items returned.
Re: V03-13 &nbs [#permalink] 13 Feb 2018, 21:15
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# V03-13

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