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Manahattan Q : Why is E wrong?

This topic has 3 expert replies and 2 member replies

Manahattan Q : Why is E wrong?

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HI,

I have already searched this question in other forums but IN THIS QUESTION THE ANS CHOICE E is different than in previous question having the same stimulus & I am having trouble eliminatig it, can u pls help me ?

TIA !!!

For each of the past two years, major department stores have reported a nearly 50% increase in their revenue generated from the sale of men's clothing manufactured by Zachary, Inc., a result that is all the more surprising because the sales of most other brands of men's clothing have been depressed over the same period. Nevertheless, Z.A.C., the parent company of Zachary Inc, does not appear to have emerged unscathed from the overall trend of decreased sales in the industry: Z.A.C. has reported a slight decline in overall sales in each of the past two years.

Which of the following, if true, most helps to explain the surprising result above?


The sales of clothing at Zachary, Inc.'s boutique stores, which, unlike department stores, are owned and operated by the company itself, have held steady over the last two years.

Two years ago, Zachary, Inc. began an ambitious new advertising campaign; in each of the last two years, the company's advertising department has overspent its planned budget by almost half.

Z.A.C. is renowned for the quality of its fabrics, and sells large quantities of fabric to a variety of manufacturers of men's clothing.

Zachary, Inc. formerly manufactured leather accessories and women's clothing in addition to men's clothing, but, for the past three years, the company has produced only men's clothing.

In the last two years, Z.A.C., in addition to maintaining its prior business ventures, expanded into two new markets, neither of which has been particularly profitable thus far.

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himu wrote:
HI,

I have already searched this question in other forums but IN THIS QUESTION THE ANS CHOICE E is different than in previous question having the same stimulus & I am having trouble eliminatig it, can u pls help me ?

TIA !!!

For each of the past two years, major department stores have reported a nearly 50% increase in their revenue generated from the sale of men's clothing manufactured by Zachary, Inc., a result that is all the more surprising because the sales of most other brands of men's clothing have been depressed over the same period. Nevertheless, Z.A.C., the parent company of Zachary Inc, does not appear to have emerged unscathed from the overall trend of decreased sales in the industry: Z.A.C. has reported a slight decline in overall sales in each of the past two years.

Which of the following, if true, most helps to explain the surprising result above?


The sales of clothing at Zachary, Inc.'s boutique stores, which, unlike department stores, are owned and operated by the company itself, have held steady over the last two years.

Two years ago, Zachary, Inc. began an ambitious new advertising campaign; in each of the last two years, the company's advertising department has overspent its planned budget by almost half.

Z.A.C. is renowned for the quality of its fabrics, and sells large quantities of fabric to a variety of manufacturers of men's clothing.

Zachary, Inc. formerly manufactured leather accessories and women's clothing in addition to men's clothing, but, for the past three years, the company has produced only men's clothing.

In the last two years, Z.A.C., in addition to maintaining its prior business ventures, expanded into two new markets, neither of which has been particularly profitable thus far.
FACT 1: Sales of Zachary, Inc.'s MEN'S CLOTHING have INCREASED.
FACT 2: The parent company Z.A.C. has reported a DECREASE in OVERALL sales.

There is only one way that the parent company's OVERALL SALES could have decreased while Zachary's sales of MEN'S CLOTHING have increased: the parent company must manufacturer ANOTHER PRODUCT WHOSE SALES HAVE DECREASED, offsetting the increase in the company's sales of men's clothing.

Answer choice C: Zachary, Inc. is renowned for the quality of its fabrics, and sells large quantities of fabric to other manufacturers of men's clothing.
Since the sales of OTHER BRANDS of men's clothing have been depressed, other manufacturers of men's clothing likely are ordering smaller quantities of Zachary, Inc.'s fabrics, explaining why there has been a decrease in the parent company's OVERALL SALES.

The correct answer C.

E: In the last two years, Z.A.C., in addition to maintaining its prior business ventures, expanded into two new markets, neither of which has been particularly profitable thus far.
This answer choice indicates that expansion into two new markets has not yielded an INCREASE IN PROFITS.
It does not explain why OVERALL SALES HAVE DECREASED.
A very important distinction:
Profits and sales are NOT the same thing.
On its own, the amount of profit does not tell us anything about the number of sales.
Eliminate E.

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Last edited by GMATGuruNY on Fri Nov 14, 2014 7:00 am; edited 1 time in total

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Senior | Next Rank: 100 Posts Default Avatar
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Hi Mitch,
Can you please explain why D is incorrect

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Aman Ahuja wrote:
Hi Mitch,
Can you please explain why D is incorrect
D:
For the past three years, Zachary, Inc. has produced only men's clothing.
Passage:
For each of the past two years, major department stores have reported a nearly 50% increase in their revenue generated from the sale of men's clothing manufactured by Zachary, Inc.
Here, sales of the one product manufactured by Zachary -- men's clothing -- have increased by nearly 50%.
Thus, D does not explain in any way why overall sales have decreased.

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Mitch Hunt
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GMATGuruNY@gmail.com

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Student Review #1
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Student Review #3

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GMATGuruNY wrote:
Aman Ahuja wrote:
Hi Mitch,
Can you please explain why D is incorrect
D:
For the past three years, Zachary, Inc. has produced only men's clothing.
Passage:
For each of the past two years, major department stores have reported a nearly 50% increase in their revenue generated from the sale of men's clothing manufactured by Zachary, Inc.
Here, sales of the one product manufactured by Zachary -- men's clothing -- have increased by nearly 50%.
Thus, D does not explain in any way why overall sales have decreased.
Hi Mitch

If we consider option D.
It says that Zachary previously manufactured leather accessories along with men's clothing but now it has stopped producing other items.
So say old revenue generated R(old) = R(leather) + R(men's clothing)
And new revenue R(new) = R(men's clothing)
Now by keeping R(new) and R(old) same,we get an effective revenue increase for R(men's clothing) which explains the anomaly.

Do let me know what am I missing here.

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ahmedbari.ace@gmail.com wrote:
GMATGuruNY wrote:
Aman Ahuja wrote:
Hi Mitch,
Can you please explain why D is incorrect
D:
For the past three years, Zachary, Inc. has produced only men's clothing.
Passage:
For each of the past two years, major department stores have reported a nearly 50% increase in their revenue generated from the sale of men's clothing manufactured by Zachary, Inc.
Here, sales of the one product manufactured by Zachary -- men's clothing -- have increased by nearly 50%.
Thus, D does not explain in any way why overall sales have decreased.
Hi Mitch

If we consider option D.
It says that Zachary previously manufactured leather accessories along with men's clothing but now it has stopped producing other items.
So say old revenue generated R(old) = R(leather) + R(men's clothing)
And new revenue R(new) = R(men's clothing)
Now by keeping R(new) and R(old) same,we get an effective revenue increase for R(men's clothing) which explains the anomaly.

Do let me know what am I missing here.
According to D, Zachary has not produced leather goods and women's clothing FOR THE PAST THREE YEARS.
According to the passage, there has been a decline in overall sales IN EACH OF THE LAST TWO YEARS.
A change that took place 3 years ago cannot serve to explain the decline in sales between 2 years ago and last year.

_________________
Mitch Hunt
Private Tutor for the GMAT and GRE
GMATGuruNY@gmail.com

If you find one of my posts helpful, please take a moment to click on the "UPVOTE" icon.

Available for tutoring in NYC and long-distance.
For more information, please email me at GMATGuruNY@gmail.com.
Student Review #1
Student Review #2
Student Review #3

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