V26-27

Question

A large pet-food manufacturer currently uses pork meal as the main protein-supplying ingredient in its most popular dog food. In order to cut costs, the manufacturer plans to switch from pork meal to a mixture of equal amounts of this pork meal and of chicken meal, which currently costs 20 percent less per pound than pork meal.
 
Which of the following, if true, casts the most doubt on the viability of the pet-food manufacturer’s plan?

A. Dogs are proportionately more likely to experience allergic reactions from eating chicken meal than from eating pork meal.
B. Because its market segment is rapidly becoming more competitive, the manufacturer will almost certainly have to lower the price per pound of its products to retain its market share. 
C. Chicken meal of the grade used for pet foods has a shorter shelf life than does the comparable grade of pork meal.
D. If the proposed change is implemented, the resulting change in overall demand would cause the wholesale market price of chicken meal to rise.
E. Chicken meal is more fuel-efficient for the manufacturer to process into pet food than is pork meal.

Bunuel · Answer

Official Solution:

A large pet-food manufacturer currently uses pork meal as the main protein-supplying ingredient in its most popular dog food. In order to cut costs, the manufacturer plans to switch from pork meal to a mixture of equal amounts of this pork meal and of chicken meal, which currently costs 20 percent less per pound than pork meal.
 
Which of the following, if true, casts the most doubt on the viability of the pet-food manufacturer’s plan?

A. Dogs are proportionately more likely to experience allergic reactions from eating chicken meal than from eating pork meal.
B. Because its market segment is rapidly becoming more competitive, the manufacturer will almost certainly have to lower the price per pound of its products to retain its market share. 
C. Chicken meal of the grade used for pet foods has a shorter shelf life than does the comparable grade of pork meal.
D. If the proposed change is implemented, the resulting change in overall demand would cause the wholesale market price of chicken meal to rise.
E. Chicken meal is more fuel-efficient for the manufacturer to process into pet food than is pork meal.

First, we need to understand the specific point of the manufacturer’s plan.
 
This is stated at the beginning of the second sentence—to   cut costs  .
 
Therefore, to CAST DOUBT on the viability of this plan, we need a   reason why manufacturing costs may NOT decrease   from their current level if the change from all-pork to half-pork, half-chicken is implemented.
 
A. An increase in allergic reactions could conceivably affect the manufacturer’s market share, but neither such reactions nor anything else experienced by the end-user could possibly affect manufacturing costs. This consideration is irrelevant.
 
B. If market developments force the manufacturer to start selling at a lower unit price, then its   revenues   per unit (per pound)—but not its costs—will go down. This consideration is irrelevant to the cost side of the balance sheet.
 
C. No reason is given to suspect that shelf-life issues might affect manufacturing costs, so this consideration is irrelevant.
 
D. The basis of the manufacturer’s planning is the lower   current   cost of chicken meal. If the change in demand inherent in its plan will push the wholesale price of chicken meal up towards the current price of pork meal, then that effect will erode the manufacturer’s anticipated cost savings.
 
E. If this statement is true, then chicken meal will be not only cheaper for the manufacturer to purchase at wholesale, but also cheaper to process into its final product! This consideration therefore gives a   further   reason why the manufacturer’s plan should lower costs—i.e., it strengthens the argument. That’s the opposite of what we want.

Answer: D

curatelycurious · Answer

Okay, I get why D is correct but why is A incorrect?

My logic behind choosing A was that it directly mentions that people would not buy it, so the plan is not viable anymore and the company lose on its sales.

The angle of costs is already mentioned in the passage that yes it would reduce cost but viability comes into play that the whole plan should work.

AbhishekP220108 · Answer

Hi  curatelycurious  look at question Stem "  casts the most doubt on the  viability of the pet-food manufacturer’s plan- The Plan- to switch from pork meal to a mixture of equal amounts of this pork meal and of chicken meal,  But Why the plan is proposed?- to cut costs, and by the Plan the cost will be 20 percent less per pound than pork meal.

So whole argument is revolving around Cost reduction.

Option A talks about Market share Loss, no where it is talking about Cost. This might be the scenario we bring in real life but here we were not told that Market share reduction will affect the costing. Hence irrelevant

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