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Manufacturing Costs

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Manufacturing Costs

by sang5650 » Thu Jan 21, 2010 11:28 am
The cost of manufacturing mobile phones in Country X is 16% less than the cost of manufacturing mobile phones in Country Y. Even after customs and transportation fees are added, it is still cheaper for Motorabilia, a company based in Country Y, to import mobile phones from Country X than to manufacture mobile phones in Country Y.

The statements above, if true, best support which of the following assertions?

a)Manufacturing a mobile phone in Country X takes 16% less time than the time it takes to manufacture a mobile phone in Country Y.

b)Country X exports more than 16% of the mobile phones that are manufactured in it.

c)Labor costs in Country X are 16% lower than those in Country Y.

d)The combined costs of customs and transportation fees of mobile phones from Country X to Country Y are more than 16% of the cost of manufacturing the mobile phones in Country Y.

e)The transportation fees for a mobile phone being imported from Country X to Country Y are less than 16% of the cost of manufacturing the mobile phone in Country Y.
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by DanaJ » Thu Jan 21, 2010 12:12 pm
What's the source of this problem?

The answer here is E. If it's still cheaper for Motorabilia to import the phones from X to Y, it means that the 16% difference in prices is not compensated by transportation and fees. If it were, it wouldn't be economical to import those phones.
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by ajith » Fri Jan 22, 2010 8:01 pm
DanaJ wrote:What's the source of this problem?

The answer here is E. If it's still cheaper for Motorabilia to import the phones from X to Y, it means that the 16% difference in prices is not compensated by transportation and fees. If it were, it wouldn't be economical to import those phones.
I disagree

It is clearly mentioned in the question that "Even after customs and transportation fees are added, it is still cheaper for Motorabilia, a company based in Country Y, to import mobile phones from Country X than to manufacture mobile phones in Country Y." So, E has nothing new to support the argument

While A says "Manufacturing a mobile phone in Country X takes 16% less time than the time it takes to manufacture a mobile phone in Country Y"

Which addresses the delay in transportation and strengthens the argument.
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by linkinpark » Fri Jan 22, 2010 8:15 pm
ajith wrote:
DanaJ wrote:What's the source of this problem?

The answer here is E. If it's still cheaper for Motorabilia to import the phones from X to Y, it means that the 16% difference in prices is not compensated by transportation and fees. If it were, it wouldn't be economical to import those phones.
I disagree

It is clearly mentioned in the question that "Even after customs and transportation fees are added, it is still cheaper for Motorabilia, a company based in Country Y, to import mobile phones from Country X than to manufacture mobile phones in Country Y." So, E has nothing new to support the argument

While A says "Manufacturing a mobile phone in Country X takes 16% less time than the time it takes to manufacture a mobile phone in Country Y"

Which addresses the delay in transportation and strengthens the argument.
E is definitely correct. A says time of production in X is 16% less than that in Y but what if cost of production is so high in X that even after it takes 16% less time but actual cost of production is more than that in Y. But from premises we're told that cost of production in X is cheaper than that in Y

so only factor that will affect profit is the transportation from X to Y which is addressed in (E)
530->480->580
when posting a question don't post OA(even masked) before some discussion.
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by ajith » Fri Jan 22, 2010 8:25 pm
linkinpark wrote:
E is definitely correct. A says time of production in X is 16% less than that in Y but what if cost of production is so high in X that even after it takes 16% less time but actual cost of production is more than that in Y. But from premises we're told that cost of production in X is cheaper than that in Y

so only factor that will affect profit is the transportation from X to Y which is addressed in (E)
Whatever extra information you get from is E is already given in the question so it provides nothing new to support. If a supporting argument merely restates the main argument, I consider it really weak.

Premise states - "Even after customs and transportation fees are added, it is still cheaper for Motorabilia, a company based in Country Y, to import mobile phones from Country X than to manufacture mobile phones in Country Y". So there is no issue of transportation charges being higher enough to balance the labor advantage. So what does E provide which is not a part of main argument itself?


E) States The transportation fees for a mobile phone being imported from Country X to Country Y are less than 16% of the cost of manufacturing the mobile phone in Country Y

This we already know from the question itself (from the statement starting "Even after...." in the main question)

I still stick with A since it addresses a new dimension - delay in imports which can be a strong reason not to import from a cheaper country. That, precisely, is the reason why despite the cost advantages some businesses are not outsourced.
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by fibbonnaci » Fri Jan 22, 2010 10:08 pm
The question stem asks you to consider the passage as true. that gives us a hint that no extra information other than what is stated in the stimulus can be assumed to be true. This is not strengthen question where in extra information to support the passage is acceptable. This belongs to family 1 type of questions such as inference, must be true etc. This is a concealed inference type question.

a)Manufacturing a mobile phone in Country X takes 16% less time than the time it takes to manufacture a mobile phone in Country Y. [ the passage does not concern time taken to manufacture at all. Let us suppose a cam in India costs $1000 and the very same thing at singapore $8000. can i say the time taken to manufacture the cam at singapore was less? it could be the same rite? the reduction in price need not necessarily indicate a change in time taken- eliminated]

b)Country X exports more than 16% of the mobile phones that are manufactured in it. [whether it exports 10 or 100 is it gonna affect the conclusion. the cost varies accordingly- eliminated]

c)Labor costs in Country X are 16% lower than those in Country Y. [out of scope. labor costs are not talked about in the passage. moreover take eg. i have mentioned in A. can a change in price necessarily indicate a change labor costs? the low cost can be due to various reasons.- eliminated]

d)The combined costs of customs and transportation fees of mobile phones from Country X to Country Y are more than 16% of the cost of manufacturing the mobile phones in Country Y. [ definite weakener. If the combined costs are gonna be greater than 16% then, obviously the total cost is gonna exceed the cost of the product produced in country X.- eliminated ]

e)The transportation fees for a mobile phone being imported from Country X to Country Y are less than 16% of the cost of manufacturing the mobile phone in Country Y.[ it is well implicated that that customs and transportation fees are less than 16%. statement is well supported and hold true. My answer]

Hope this helps!
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by rahul.s » Sat Jan 23, 2010 9:52 am
what's the source?
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