Fedora Convertibles began selling the Freewheeler

Expert replies

aspirant2011: Legendary Member; Posts: 1574; Joined: Fri Jan 28, 2011 2:52 amFollowed by: 13 members; Thanked: 88 times

by aspirant2011 » Sat May 28, 2011 10:03 am

Fedora Convertibles began selling the Freewheeler - its newest convertible sports car - in May of this year. Fedora sent out a press release last month indicating that the Freewheeler's sales for May, June, July, and August totaled over 50,000. As a result, Fedora will in all likelihood easily meet its stated sales goal of 120,000 for Freewheeler's first year of release. Which of the following would be most useful in order to evaluate this prediction?

A. Fedora is the market leader in this category of automobile.
B. Freewheeler is significantly more expensive than similar models produced by Fedora'competitors.
C. Fedora released a similar model in May of the previous year.
D. Sales of similar models of cars are typically much higher in the summer months than at any other time of the year.
E. Freewheeler sales are important to meeting the sales goals of Fedora as a company.

[spoiler]OA: Will be posted later. Please explain each answer choice in detail[/spoiler]

Source: Beat The GMAT — Critical Reasoning | Sat May 28, 2011 10:03 am

cans: Legendary Member; Posts: 1309; Joined: Mon Apr 04, 2011 5:34 amFollowed by: 123 members; Location: India; Thanked: 310 times; GMAT Score:750

by cans » Sat May 28, 2011 10:47 am

IMO D
A - Even if Fedora is the market leader, we can't predict no. of sales just on this basis.
B - Argument doesn't involve competitors at all
E - Irrelevant
Not sure between C & D as such, but for C - Past can't predict the future,
and thus D - 4 months sales is 50,000 and if its an avg, then yearly sales = 150,000
but as summer sales are higher, so a target of 120,000 can still be reached.

aspirant2011: Legendary Member; Posts: 1574; Joined: Fri Jan 28, 2011 2:52 amFollowed by: 13 members; Thanked: 88 times

by aspirant2011 » Sat May 28, 2011 11:14 am

cans wrote:IMO D
A - Even if Fedora is the market leader, we can't predict no. of sales just on this basis.
B - Argument doesn't involve competitors at all
E - Irrelevant
Not sure between C & D as such, but for C - Past can't predict the future,
and thus D - 4 months sales is 50,000 and if its an avg, then yearly sales = 150,000
but as summer sales are higher, so a target of 120,000 can still be reached.

Hi cans,

I have a doubt on one part I.e in the argument months May, June, july and august are mentioned but then in option D which summer months are being referred to???in your explanation also u have mentioned that rest amount will be gained in summer months.....please explain which months are u referring to ???

maihuna: Legendary Member; Posts: 1578; Joined: Sun Dec 28, 2008 1:49 amFollowed by: 9 members; Thanked: 82 times; GMAT Score:720

by maihuna » Sat May 28, 2011 11:28 am

I am not sure whether the weather pattern is same across the globe, but just assuming these are summer months, D gave an answer in negative. 120k requires 10k sell per month, the avg of 4 month is 12.5 which is 25%more, going by defn, it is likely 25% more for more month will not be able to meet the pattern of 8 month, for if high is 100% sales in remaining month will be only approx 6k so remaning 8 month will give only approx 50 k resulting in only 100 k rather than 120.

Charged up again to beat the beast

aspirant2011: Legendary Member; Posts: 1574; Joined: Fri Jan 28, 2011 2:52 amFollowed by: 13 members; Thanked: 88 times

by aspirant2011 » Sun May 29, 2011 7:33 am

maihuna wrote: it is likely 25% more for more month will not be able to meet the pattern of 8 month, for if high is 100% sales in remaining month will be only approx 6k so remaning 8 month will give only approx 50 k resulting in only 100 k rather than 120.

Hi Maihuna,

I am not able to understand your above reasoning

subhashghosh: Senior | Next Rank: 100 Posts; Posts: 43; Joined: Fri Apr 08, 2011 7:32 am; Thanked: 2 times

by subhashghosh » Sun May 29, 2011 8:16 am

Answer is D, please look here.

sivaelectric: Master | Next Rank: 500 Posts; Posts: 439; Joined: Sat Aug 09, 2008 8:32 amFollowed by: 28 members; Location: India; Thanked: 34 times

by sivaelectric » Sun May 29, 2011 10:51 am

Perfect Choice would be D

If I am wrong correct me

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Chitra Sivasankar Arunagiri

hardikm: Senior | Next Rank: 100 Posts; Posts: 64; Joined: Mon Apr 27, 2009 2:52 pmFollowed by: 1 member; Location: Dallas; Thanked: 10 times

by hardikm » Sun May 29, 2011 4:59 pm

IMO D

cans: Legendary Member; Posts: 1309; Joined: Mon Apr 04, 2011 5:34 amFollowed by: 123 members; Location: India; Thanked: 310 times; GMAT Score:750

by cans » Sun May 29, 2011 10:02 pm

I have a doubt on one part I.e in the argument months May, June, july and august are mentioned but then in option D which summer months are being referred to???in your explanation also u have mentioned that rest amount will be gained in summer months.....please explain which months are u referring to ???

I assumed May, June, July and August as summer months. As I said, 50k in 4 months, 12.5k per month on an avg. Remaining target = 70k in 8 months or an approx avg of 9k per month.
Thus even if 12.5k sales in summers are typically higher, We can assume that 9k per month target can be easily achieved.

@maihuna: can you please explain how it is negative?

itsmebharat: Master | Next Rank: 500 Posts; Posts: 150; Joined: Tue Aug 18, 2009 7:36 amFollowed by: 2 members; Location: gurgaon; Thanked: 8 times

by itsmebharat » Sun May 29, 2011 10:59 pm

IMO D

I am not an Expert, please feel free to suggest if there is an error.

aspirant2011: Legendary Member; Posts: 1574; Joined: Fri Jan 28, 2011 2:52 amFollowed by: 13 members; Thanked: 88 times

by aspirant2011 » Mon May 30, 2011 8:18 am

cans wrote: Thus even if 12.5k sales in summers are typically higher, We can assume that 9k per month target can be easily achieved.

Hi Cans,

I don't agree with ur this part because the sales can be 1 K per month also and we can't assume that 9 K per month can be easily achieved...........

baladon99: Senior | Next Rank: 100 Posts; Posts: 66; Joined: Wed Jul 07, 2010 11:06 am; Thanked: 1 times

by baladon99 » Mon May 30, 2011 11:08 am

Freewheeler's sales for May, June, July, and August totaled over 50,000. Based on this the company proportionately calculates and predicts that the sales figure would reach its goal of 1,20,000 at the end of one year.

What if these type of cars(Free wheeler) sell more in summer than in other months ?

Then the comapny's proportionality calculation would go wrong ; there is a chance that the number of cars sold in the coming months may be lower than the number expected by the company.
So D

cans: Legendary Member; Posts: 1309; Joined: Mon Apr 04, 2011 5:34 amFollowed by: 123 members; Location: India; Thanked: 310 times; GMAT Score:750

by cans » Mon May 30, 2011 11:17 am

baladon99 wrote:Freewheeler's sales for May, June, July, and August totaled over 50,000. Based on this the company proportionately calculates and predicts that the sales figure would reach its goal of 1,20,000 at the end of one year.

If company proportionately calculates & predicts, then won't it predict sales of 150k??

sanabk: Master | Next Rank: 500 Posts; Posts: 174; Joined: Fri Apr 02, 2010 3:41 pmFollowed by: 1 member; Thanked: 6 times

by sanabk » Mon May 30, 2011 11:24 am

4 months sale accounted for 50K. What if the rest of the 8 months' selling is zero (implying cassandra's pessimism) or less than 9K??? Kindly post the official explanation if possible.

Thanks in advance!!!

baladon99: Senior | Next Rank: 100 Posts; Posts: 66; Joined: Wed Jul 07, 2010 11:06 am; Thanked: 1 times

by baladon99 » Mon May 30, 2011 11:32 am

@cans
In my opinion , the calculation need not be mathematically accurate in these sort of problems. As you say ,even though the 1,50,000 cars are sold , that still meets company's goal of 1,20,000.

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