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Bain Business Case

Hi,

This is a question from Bain sample case. I attach the question and relevant graphs below. Would appreciate if someone can give me hints on how to solve this problem. Thank you very much!

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Top answer
Ian
Coach
on Jan 25, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

You need to calculate the import parity price from the last exhibit (2.0 + .5 times 10%)

Then, calculate the total costs of production (material 1 and 2) from the 1st exhibit

Finally, look at the amount of product produced, the total cost for it, and the total revenue to get your answer!

on Feb 24, 2023
Hi Ian,

Price = (2k+0.5k) * 1.1 = 2.75k per ton
Revenue = 10k * 2k(local) + 18k * 2.75k (export) = 69.5m
VC = 1.5k*14kty + 1k*18kt = 39m
FC = 14m
EBITDA = 69.5 - 39 -14 = 16.5m which doesnt match any of the answer

However, if for the export price I do:
Price = 1.5k + 0.4k * 1.0666 = 2.02k
Keep everything else constant
EBITDA = 56.36 - 39 -14 = 3.36 which is still off but a bit closer.

I feel I've completely missed something here - keen to get your thoughts
Clara
Coach
on Jan 26, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Could you share where you obtained this?

Cheers, 

Clara

on Jan 27, 2021
Yes
on Jan 27, 2021
https://mconsultingprep.com/wp-content/uploads/2019/10/Business-Case-Test-2-Question-fixed.pdf
on Jan 27, 2021
https://mconsultingprep.com/wp-content/uploads/2019/10/Business-Case-Test-2-Context.pdf
on Apr 25, 2023

option 1: EBITDA is -928.57k

option 2: EBITDA is +1M

so should be C?

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