Ask NN mindfree several questions

maronghong

Mindfree:
Your analyses about CR really open my mind. I'd like ask several question, please help me analyses. These questions from US's Veritas Gmat.
1. In the 1987 Fabrico, a clothing manufacturer, sold to its customers a total of 2.3 million dollar worth of clothing, a 17 percent increase over 1986 sales. In January 1988, however, Fabrico closed one of its clothing factories, citing reduced demand for its products as the major reasons.
Which one of the following , if true about 1987, contributes most to a resolution of the apparent discrepancy noted between the sales figures and the reason offered for clothing a factory.
A). The total worldwide dollar value of clothing sales by manufacturers to customers increased by 5percent over sales in 1986.
B). Fabrico's employees dropped eariler demands for a 25 percent increase in company -paid benefits and a 15 percent increase in hourly wages.
C). Because of escalating costs for raw materials, price charged by Fabrico for its products were on average 42 percent higher than they were in 1986.
D). Fabrico introdeced several new styles of clothing that were generally praised by fashion critics and that sold very well.
E). Fabrico spent less on capital improvements than it did in 1986, when added new plant capacity and new equipment.

mindfree

C

What is your question? Which choice is confusing to you?

maronghong

why B is worry. could you explain for me?

mindfree

You need to stay within the original reasoning. B might explain why closing a factory. However, it cannot reconcile the apparent conflicting evidence, which is: higher revenue and reduced demand at the same time.

C perfectly explained how it happened. High dollar value of revenue is because of much higher price. Dollar Revenue = Units Sold * Unit Price. So if DR went up by 17% while UP went up by 42%, US must have gone down. Clear enough?

maronghong

Thanks a lot.