BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

CR problem

This topic has expert replies
Post new topic Post Reply
Previous Topic Next Topic
Newbie | Next Rank: 10 Posts
Posts: 5
Joined: Tue Jun 21, 2011 11:01 pm

CR problem

by moindanawala » Wed Sep 19, 2012 8:32 am
Last year company X experienced an unexpected steep drops in profits.To offset this loss,company X should reduce its workforce by 10%.Doing so will allow the company to save a great deal in payroll expenditures.Company X will therefore be able to recoup the losses.

The argument above assumes that
A. The amount saved in payroll expenditures will exceed the amount lost in profits.
B. The amount saved in payroll expenditures will equal the amount lost in profits.
C. Reducing Company X's workforce will not cause the company to reduce productivity.
D. Company X has no reserve funds to offset its losses.
E. Company X has not at sometime in the past reduced its workforce.

My analysis brings me to an answer which is different from the OA, would request someone to try solving this and suggest the right answer and logic for the same.

I will post the OA after the discussion.
Top
Source: — Critical Reasoning |
Master | Next Rank: 500 Posts
Posts: 101
Joined: Sun Jun 03, 2012 10:10 pm
Thanked: 10 times
Followed by:1 members

by everything's eventual » Wed Sep 19, 2012 5:59 pm
This is my take :

The argument is that Company X will be able to recoup the losses by reducing its workforce and therefore save a great deal in payroll expenditures.

[spoiler]A)[/spoiler] The argument just says that the company will save a great deal in payroll expenditure. The argument does not depend on whether the amount saved in payroll expenditures will exceed or equal the losses.

[spoiler]B)[/spoiler] Same as above.

[spoiler]D)[/spoiler] Irrelevant.

[spoiler]E)[/spoiler] Irrelevant.

[spoiler]C)[/spoiler] If the company's productivity is reduced then it will suffer more losses and will not be able to recoup its losses. IMO C

I was confused between A,B and C. But recouping does not necessarily mean exceed so I rejected A and similarly recouping does not necessarily mean equal so I rejected B.

I was a initially a bit sceptical about option C mainly because at first glance I thought that the question is talking about recouping past losses. C talks about a situation which could lead to future losses. But C seems to be the best option.
Top
User avatar
Master | Next Rank: 500 Posts
Posts: 279
Joined: Mon Jun 25, 2012 10:56 pm
Thanked: 60 times
Followed by:10 members

by anuprajan5 » Wed Sep 19, 2012 10:36 pm
I am a bit sceptical about my answer but my answer would be B.

Premises state that company X saves a great deal in payroll expenditure. how much - we don't know
It also states that Company X will be able to recoup the losses.

The reason being that Company X would recoup the losses by saving in payroll expenditure. By that logic, the amount saved in payroll should equal the amount lost in profits.

Regards
Anup
Top
User avatar
GMAT Instructor
Posts: 15539
Joined: Tue May 25, 2010 12:04 pm
Location: New York, NY
Thanked: 13060 times
Followed by:1906 members
GMAT Score:790

by GMATGuruNY » Thu Sep 20, 2012 4:46 am
moindanawala wrote:Last year company X experienced an unexpected steep drops in profits.To offset this loss,company X should reduce its workforce by 10%.Doing so will allow the company to save a great deal in payroll expenditures.Company X will therefore be able to recoup the losses.

The argument above assumes that
A. The amount saved in payroll expenditures will exceed the amount lost in profits.
B. The amount saved in payroll expenditures will equal the amount lost in profits.
C. Reducing Company X's workforce will not cause the company to reduce productivity.
D. Company X has no reserve funds to offset its losses.
E. Company X has not at sometime in the past reduced its workforce.

My analysis brings me to an answer which is different from the OA, would request someone to try solving this and suggest the right answer and logic for the same.

I will post the OA after the discussion.
PLAN: To offset recent losses, Company X should reduce its workforce by 10%.

When a CR proposes a plan, one assumption is that there will no UNINTENDED CONSEQUENCES.

Answer choice C, negated: Reducing Company X's workforce will cause the company to reduce productivity.
The negation of C points out a potential consequence of the plan: a reduction in productivity.
For the plan to work, it must be true that this potential consequence will not prevent the company from recouping its losses.

The correct answer is C.

B: The amount saved in payroll expenditures will equal the amount lost in profits.
Too strong: equal means not a penny more, not a penny less.
For the plan to work, the amount saved need not be precisely EQUAL to the amount lost; if the amount saved EXCEEDS the amount lost, Company X will still recoup its losses.
Eliminate B.
Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.

As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.

For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
Top
Junior | Next Rank: 30 Posts
Posts: 14
Joined: Wed Jan 12, 2011 9:45 am
Followed by:2 members

by ananthrajavadhuta » Sun Sep 23, 2012 2:29 am
B.
Top
Junior | Next Rank: 30 Posts
Posts: 14
Joined: Wed Jan 12, 2011 9:45 am
Followed by:2 members

by ananthrajavadhuta » Sun Sep 23, 2012 2:34 am
B.
Top
User avatar
Junior | Next Rank: 30 Posts
Posts: 10
Joined: Tue Nov 23, 2010 5:10 am
Location: Bangalore, India
Thanked: 1 times

by gh_chandra2000 » Tue Sep 25, 2012 8:39 am
I have a doubt. In CR, one of the rules is not to have any assumptions even if they are correct. In Option C, it mentions only about workforce<->productivity relation whereas in the question it mentions only workforce<->profits relationship. So doesn't option C assumes the relation between productivity and profit? Is that acceptable? Please correct if i am wrong.

I would have accepted option c if that says "Reducing Company X's workforce will not cause the company to lose profits"
Top
Legendary Member
Posts: 1404
Joined: Tue May 20, 2008 6:55 pm
Thanked: 18 times
Followed by:2 members

by tanviet » Mon Oct 22, 2012 2:19 am
GMATGuruNY wrote:
moindanawala wrote:Last year company X experienced an unexpected steep drops in profits.To offset this loss,company X should reduce its workforce by 10%.Doing so will allow the company to save a great deal in payroll expenditures.Company X will therefore be able to recoup the losses.

The argument above assumes that
A. The amount saved in payroll expenditures will exceed the amount lost in profits.
B. The amount saved in payroll expenditures will equal the amount lost in profits.
C. Reducing Company X's workforce will not cause the company to reduce productivity.
D. Company X has no reserve funds to offset its losses.
E. Company X has not at sometime in the past reduced its workforce.

My analysis brings me to an answer which is different from the OA, would request someone to try solving this and suggest the right answer and logic for the same.

I will post the OA after the discussion.
PLAN: To offset recent losses, Company X should reduce its workforce by 10%.

When a CR proposes a plan, one assumption is that there will no UNINTENDED CONSEQUENCES.

Answer choice C, negated: Reducing Company X's workforce will cause the company to reduce productivity.
The negation of C points out a potential consequence of the plan: a reduction in productivity.
For the plan to work, it must be true that this potential consequence will not prevent the company from recouping its losses.

The correct answer is C.

B: The amount saved in payroll expenditures will equal the amount lost in profits.
Too strong: equal means not a penny more, not a penny less.
For the plan to work, the amount saved need not be precisely EQUAL to the amount lost; if the amount saved EXCEEDS the amount lost, Company X will still recoup its losses.
Eliminate B.
Thank you expert. it is great.

specifically, I like "When a CR proposes a plan, one assumption is that there will no UNINTENDED CONSEQUENCES." because knowing an assumption before going to answer choices is key to most CR questions.

I want review all CR problem which contain your posting like the posting you have just made in this quesion. How I can do that?

pls answer Mintch hutch. Thank a lot.
Top
Master | Next Rank: 500 Posts
Posts: 418
Joined: Sun Jul 04, 2010 12:48 pm
Thanked: 6 times
Followed by:3 members

by gmatdriller » Thu Oct 25, 2012 2:47 pm
Is A wrong for the reason below?

A says payroll expenses will EXCEED amount lost in profits.

A NEGATED: payroll expenses will NOT exceed amount lost in profits.
possibilities: (i) payroll expenses = loss in profits; company can still recoup losses
(ii) payroll expenses < loss in profits; company will still be in losses.
Because (i) and (ii) present different possibilities -one reinforcing the argument (i),
and the other destroying the argument- the choice is incorrect.

Is there a better explanation for A?
Top
Senior | Next Rank: 100 Posts
Posts: 58
Joined: Mon Aug 27, 2012 3:09 am
Thanked: 2 times

by akashkumar1987 » Thu Oct 25, 2012 7:05 pm
Hi Guys,

I am confused between B and D.

B - If company has to recoup then loss in profit should be equal to the saving in payroll expenditures.
D - If company has reserve fund then it will not reduce its workforce and reserve fund can recoup the losses.

I have also gone through the above post but none of u have selected D... Please explain what is wrong with D.
Top
Master | Next Rank: 500 Posts
Posts: 418
Joined: Sun Jul 04, 2010 12:48 pm
Thanked: 6 times
Followed by:3 members

by gmatdriller » Fri Oct 26, 2012 2:11 am
akashkumar1987 wrote:Hi Guys,

I am confused between B and D.

B - If company has to recoup then loss in profit should be equal to the saving in payroll expenditures.
D - If company has reserve fund then it will not reduce its workforce and reserve fund can recoup the losses.

I have also gone through the above post but none of u have selected D... Please explain what is wrong with D.
The argument has set out a PLAN to achieve a GOAL. [PLAN ======> GOAL]

for D:
Question: CAN THIS PLAN TRULY ACHIEVE ITS GOAL?
Has the argument taken into consideration obstacles that might, as a matter of fact, defeat the objective?
Focus is not on other methods of attaining the goal...that's why D is out.

For B:
think quants. is it necessary that "payroll exp = loss prof" for the plan to succeed?
Consider:
(i) payroll exp = $10m; loss profit = $10m.... Plan will succeed
(ii) payroll exp = $10.5m; loss profit = $10m.... Plan will succeed
For the plan to succeed, its not necessary that "payroll exp = loss in profit"
B is out.

Does this explanations help?
Top
Post new topic Post Reply
• Page 1 of 1