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
Anonymous A
on Nov 11, 2021
Global
Question about

Relationship profit margin - revenues and costs

Referring to:

Coffee machines revenues have increased by 1/9 in the last year and their costs have increased proportionally. This means that machines profit margin has been steady and price reduction has been offset by lower costs.”

If Coffee machine revenues increase which as prices fall must be due to an increase in units. In the case that units would increase but without a fall in prices, we would expect that profit margins increase as fixed costs are now split among more units. (assuming equal VC). Now that prices fall it seems feasible to me that the profit margin is steady and the same cost levels, as I would normally expect profit margins to increase when units increase.

1
900+
10
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Ian
Coach
on Nov 11, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

I think you're saying this situation can only be explained by higher volumes?

If so, I would agree!

Similar Questions
Consulting
Question about
Average Price Decline Calculation
on Jun 23, 2020
Global
3
3.2k
Top answer by
Ian
Coach
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success
26
3 Answers
3.2k Views
+1
Consulting
Question about
Average price decrease calculation
on Aug 15, 2022
Global
2
2.7k
Top answer by
Ian
Coach
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success
22
2 Answers
2.7k Views