Critical Reasoning

A local department store hires college students for one month every spring to audit its unsold inventory. It costs the department store 20 percent less to pay wages to students than it would cost to hire outside auditors from a temporary service. Even after factoring in the costs of training and insuring the students against work-related injury, the department store spends less money by hiring the student auditors than it would by hiring auditors from the temporary service.

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

(A) The amount spent on insurance for college-student auditors is more than 20 percent of the cost of paying the college students' basic wages.

(B) It takes 20 percent less time for the college students to audit the unsold inventory than it does for the outside auditors.

(C) The department store pays its college-student auditors 20 percent less than the temporary service pays its auditors.

(D) By hiring college students, the department store will cause 20 percent of the auditors at the temporary service to lose their jobs.

(E) The cost of training its own college-student auditors is less than 20 percent of the cost of hiring auditors from the temporary service.

OA : E source : kaplan 800

(A) The amount spent on insurance for college-student auditors is more than 20 percent of the cost of paying the college students' basic wages.

(B) It takes 20 percent less time for the college students to audit the unsold inventory than it does for the outside auditors.

(C) The department store pays its college-student auditors 20 percent less than the temporary service pays its auditors.

(D) By hiring college students, the department store will cause 20 percent of the auditors at the temporary service to lose their jobs.

(E) The cost of training its own college-student auditors is less than 20 percent of the cost of hiring auditors from the temporary service.

A) - nothing about insurance
B) - it doesnt have to take less time to be cheaper ($10/hr * 100 hrs is more than $25 * 50 hrs)
C) - not necessarily (there is a gross margin that temporary staffing firm has + training costs of dept store)
D) - WHAT? - out without explanation
E) - since they pay 20 percent less, and even after training costs it is still cheaper to hire students, training costs have tobe < 20 percent of pay differential per student.

E

It's E. If auditors are paid $100 and students are paid $80 then student training must be less than 20% of auditor's pay to still be less than $100.

Total Cost Incurred to the retail store = Cost to the Auditor + Training Cost.

Let us have figures to understand the whole logic.

For example :
Cost to External Auditor = 100$
then
Cost to Student employee = 80 $ (It costs the department store 20 percent less to pay wages to students than it would cost to hire outside auditors )

Another premises in the argument states that total cost for the student employee inclusive of training cost is LESS THAN

external auditors.

For this condition to be true, the training costs to the students should be less than 20 % of external auditor cost else conclusion falls apart.

E fits the bill

true that!

gmatmachoman wrote:Total Cost Incurred to the retail store = Cost to the Auditor + Training Cost.

Let us have figures to understand the whole logic.

For example :
Cost to External Auditor = 100$
then
Cost to Student employee = 80 $ (It costs the department store 20 percent less to pay wages to students than it would cost to hire outside auditors )

Another premises in the argument states that total cost for the student employee inclusive of training cost is LESS THAN

external auditors.

For this condition to be true, the training costs to the students should be less than 20 % of external auditor cost else conclusion falls apart.

E fits the bill

Hi,

consider this.
cost of external auditor= $100
cost of student= $50
cost of training student= $30 (30% of cost of external auditor)
Total cost incurred on student =50+30=$80 (satisfies the condition as given in question)

In this case we see that E is not essentially right however it is the best option.
Can someone correct me pls??

E. This statement fits best, and one way we can verify that it's correct is to see what happens if it's not true. If the cost of training college students is more than 20 percent of the cost of hiring auditors from the temporary service, the overall cost of college students must be higher than the cost of temporary-service auditors. That would contradict the stimulus. Hence, E is the answer.