This is a necessary assumption question so our task is to find something that is absolutely 100% to assume in order for this argument to work.
(Studies have shown) that working on a flextime schedule will lead to increased morale
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ABC Company should implement flextime schedule in order to increase production.
We get a lot of good stuff happening here. Here are 3 important things to note:
(1) While this is an early question and there are definitely bigger gaps, it is always important to note when it says that "studies have shown" or something similar. This is because the arguer is essentially basing the argument on these studies. Maybe the studies are a bunch of BS?
(2) The word "should." This is a very important word on the LSAT, especially on assumption questions. Because the conclusion is talking about what ABC "should" do, we might expect an answer choice having the word "should" in it.
(3) There is a definite gap between increased moral and increased production. Maybe there is just a correlation between the two and more moral might not necessarily mean more production.
Now let's move onto the answer choices:
(A) This is a very non consequential and narrow answer choice that need not be assumed. So what if this is true? Does this do anything to the argument? Not really. This doesn't speak to a net increase in production, all it says is that some people who prefer the flextime schedule are productive. Maybe that is only constituting 4 out of 100 people. Maybe everyone else hates the flextime schedule so much that they will not work at all if it is implemented.
(C) This is talking about a reduction "lateness" and "absenteeism." However, we must ask whether or not this is related to production. Maybe the people who are late or absent work twice as hard when they are at work to make up for it, causing an increase in the net production of the company. Also, who's to say that what "tends to happen" will happen at this company? Either way, all of these questions lead us to conclude that this answer choice is simply not necessary for the argument to work.
(D) This might actually weaken the argument. A flextime schedule would probably make it so that there are few (perhaps none) times when all employees are present. If they are most productive when all employees are present, this would probably mean that they are most productive without a flextime schedule, no?
(E) Scope! We don't care about other companies and this doesn't tell us anything about the strength of the argument.
(B) is the correct answer choice. While it doesn't have the word "should" like I was expecting, it is definitely necessary. Look at how weak this answer choice is. It is merely saying that an increase in morale "could lead" to increased production. This is perfectly fine, and perhaps really good, in necessary assumption questions. After all, what is necessary is often not very strong.