Why are the labour costs (in the amount of 5 million) not added in the gross profit planning? Since cat toilets are no longer produced, the costs for the process are eliminated in addition to the sales.
Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!
Back to overview
8
10
8
Show more
Global
Consideration of labour costs for cat toilet in gross profit planning
1
1.1k
Be the first to answer!
Nobody has responded to this question yet.
Hi David,
I'm a bit confused by your question, but I do think the answer is in the case (See below):
- Termination of production and sale of cat lavatories
- Cat lavatories are a loss-maker as they do not generate gross profit but account for personnel costs and other operating costs. Consequently, cat lavatories reduce profit. Since costs for employees and other operating expenses can be eliminated, production should be discontinued.
- Evaluation: Benefits result from an increase in profit. Possible disadvantages, on the other hand, are for example damage of reputation when ending production and reducing staff.
Similar Questions
Consulting
Cost of transport quantitative analysis
on May 25, 2023
Global
3
900+
3 Answers
900+ Views
Consulting
Why do we use the revenue given in table 1 for the gross profit planning and not the revenue that we calculated before?
on Oct 12, 2023
Global
2
700+
2 Answers
700+ Views
Company case by
