GMAT Focus EditionData InsightsEasy
A retail company is analyzing its sales data for three product categories: Electronics, Apparel, and Home Goods. The company wants to understand the average revenue generated per transaction for each category. The data for the last quarter is as follows: Electronics: Total Revenue = $1,200,000, Number of Transactions = 2,500 Apparel: Total Revenue = $800,000, Number of Transactions = 4,000 Home Goods: Total Revenue = $1,500,000, Number of Transactions = 3,000 Which product category has the highest average revenue per transaction?
- AElectronics and Home Goods have the same average revenue per transaction.
- BHome Goods
- CElectronics
- DApparel
Show answer & explanationAnswer & explanation
Correct answer: C. Electronics
To determine the average revenue per transaction for each category, divide the total revenue by the number of transactions. Electronics: $1,200,000 / 2,500 = $480. Apparel: $800,000 / 4,000 = $200. Home Goods: $1,500,000 / 3,000 = $500. Home Goods has the highest average revenue per transaction. My previous answer A was incorrect, I will update the answer and explanation accordingly.
Why the other options are wrong
- A. The average revenues per transaction are different for all categories.
- B. Home Goods has the highest average revenue per transaction at $500.
- D. Apparel has an average revenue per transaction of $200.
Average Transaction Value
Average Transaction Value (ATV) is a key e-commerce metric that measures the average amount of money a customer spends per transaction.
- Calculated as Total Revenue / Number of Transactions.
- Higher ATV indicates customers are spending more per purchase.
- Useful for identifying high-value product categories or customer segments.
Memory trick: Average Total Value: Revenue Over Transactions!