Sales executive: Recent changes to how our website is managed mean tha

Question

Sales executive: Recent changes to how our website is managed mean that our cost of business has risen by $1000 per month. While many have suggested that the best way to deal with this is to increase our prices in order to cover the difference, such behavior would induce our customers to look elsewhere for a similar, less expensive service. Instead we should focus on increasing our sales. Since our product sells for $100, if we can increase sales by a mere 10 users per month, then we can cover the difference in cost.

Which of the following is an assumption upon which the sales executive’s argument depends?

A. There are no additional costs associated with adding 10 new users beyond the $1000 increase in website management costs.

B. The increased website management costs do not change how users interact with the website.

C. It is necessary for the company to make the changes to how the website is managed in order to maintain their current user base.

D. The changes to the website will not make the website more difficult for the average user to use.

E. Increasing sales is the only way for the company to make up the additional marketing cost each month.

Skywalker18 · Answer

Sales executive: Recent changes to how our website is managed mean that our cost of business has risen by $1000 per month. While many have suggested that the best way to deal with this is to increase our prices in order to cover the difference, such behavior would induce our customers to look elsewhere for a similar, less expensive service. Instead we should focus on increasing our sales. Since our product sells for $100, if we can increase sales by a mere 10 users per month, then we can cover the difference in cost.

Type - assumption
Boil it down - Since our product sells for $100, if we can increase sales by a mere 10 users per month, then we can cover the difference in cost.
Pre-thinking -Apart from the $1000 increase in website management costs, there is no other cost associated with additional 10 new users

A. There are no additional costs associated with adding 10 new users beyond the $1000 increase in website management costs. - Correct - If there are other costs, then we will need to sell the product to more customers in order to compensate for these costs.

B. The increased website management costs do not change how users interact with the website. - Incorrect - it does not address whether we can cover the cost by adding 10 users per month

C. It is necessary for the company to make the changes to how the website is managed in order to maintain their current user base.- Irrelevant

D. The changes to the website will not make the website more difficult for the average user to use. - Irrelevant

E. Increasing sales is the only way for the company to make up the additional marketing cost each month. Irrelevant - the argument never claims that increasing sales is THE only way

Answer A

Recent changes to how our website is managed mean that our cost of business has risen by $1000 per month -- the increase in cost is 1000$ per month

Since our product  sells  for $100, if we can increase sales by a mere 10 users per month, then we can cover the difference in cost. -  here it is mentioned that selling price of a product is 100 $ whereas it should be profit. 
 If the profit per product is 100$ , then selling the product to 10 additional customers per month will lead to breaking even on the investment on website improvement.

AjiteshArun  ,  GMATNinja  ,  mikemcgarry  ,  egmat  ,  RonPurewal  ,  DmitryFarber  ,  MagooshExpert  ,  ccooley  ,  GMATNinjaTwo  ,  KarishmaB  , GMATGuruNY  , other experts - please enlighten

debubhb · Answer

According to the passage changes are obvious, so $1000/month will be added in extra cost. Now to overcome the difference amount sales executive is suggesting to improve sales figure. Now to be the conclusion true OPTION D must be hold true.
As if any difficulties appear due changes in website, then increase in sale will not be possible.

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KarishmaB · Answer

Cost has risen by $1000 and we need to cover this expense. It means we need an additional revenue of $1000 which would lead to the same profit as before i.e. there would be no loss due to increase in maintenance. Cover an expense means get revenue equal to the expense to not bear a loss on the expense. An increase in profit is not mentioned.

Bunuel · Answer

VERITAS PREP OFFICIAL SOLUTION:

For any assumption question, remember that your first job is to understand the stimulus itself and then to negate each answer choice, looking for the answer choice that, when negated, damages the argument. This is the assumption that the argument is making.

The sales executive states first that the monthly cost of maintaining the company's website is going up by $1000 per month. She then states that the company shouldn't increase its prices since doing so would lead to fewer sales. Instead, she says that they can cover the difference in their costs to run the website by increasing their sales by 10 users per month since each user pays $100. At first glance, the math works out since 10 users x $100/user = $1000. But keep in mind - that's a razor thin margin!

Choice (A) shows what a slim margin that is. When negated, it becomes "There ARE additional costs associated with adding new users other than the $1000 increase in website management costs." If this were true, then adding 10 new users per month would not cover the difference in cost between the two. Since choice (A) harms the argument when negated, it must be the correct answer.

Among the other answers, choice (B) states that the changes to website management will change how users interact with the site when the answer choice is negated. Since this has nothing to do with the amount of money the company gets, this can be eliminated. Choice (C) negated states that it isn't necessary for the company to make the changes in order to keep its current userbase. This doesn't relate to the conclusion about how the company can make up for the difference in cost. Choice (D) negated states that the changes will make it more difficult for users to use the website. Again, this doesn't relate to the conclusion and can be eliminated. Choice (E) becomes that increasing sales isn't the only way for the company to make up the $1000 difference. Again, while this might be true, the conclusion is about the sales executive's specific plan and the assumption should be too.

dcummins · Answer

The argument is that the additional costs of $1k can be covered by merely adding an additional 10 sales @ $100 each.

Business sense should tell you straight away that the author assumes no change in variable costs associated with increasing sales by 10.

This is simply answer choice A

B - incorrect as it deals with behaviour, not sales.
C - Not relevant to recovery of $1k in costs. Its already happened. The argument is concerned with recovery.
D - Not relevant to the argument at all. The argument is concerned with cost recovery.
E - Even if it isn't the only way this doesn't need to be assumed to make the argument. The argument stated one way the $1k can be recovered, so if an alternate way was stated in the argument e.g. "WE MUST REDUCE EXPENDITURE in MARKETING BY $1k" then THAT way would be the only viable method.

The author's conclusion is true no matter what is stated. We need an assumption that validates this.

VerbalBot · Answer

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Sales executive: Recent changes to how our website is managed mean tha

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