# Werde aktiv in unserer Community aus über 458.000 Gleichgesinnten!

Verabrede dich zum Casen über das Meeting-Board, nimm an Diskussionen in unserem Consulting Q&A teil und finde gleichgesinnte Case-Partner, um dich auszutauschen und gemeinsam zu üben!

# Fixed costs

Wall Inc.
Neue Antwort am 5. Feb. 2021
3 Antworten
1,5 T. Views

May I please ask how can we assume the fix cost is \$300K? fixed cost per unit is \$3, if we change the volume, the fixed costs= \$3 * unit sold, is it correct?

thank you

## Übersicht der Antworten

• Datum aufsteigend
• Datum absteigend
• Beste Antwort

Hi JIE,

This case is a bit misleading. It really should be contribution margin. That is, at x rate of production, what is the marginal FC per unit sold.

Of course, this changes as you change # of units.

War diese Antwort hilfreich?

Hello JIE,

You are right, the text of the case is quite confusing on that.
I think that the "fixed cost/Unit=3\$" is just the incidence of the fixed costs per unit sold (total fixed costs/total volume). By definition fixed costs can not be strictly correlated with volumes. For that reason, once that you calculate the fixed costs as 3\$/unit*100,000units=300k\$, you can assume that they do not vary for the rest of the case.

Is that clear?

Best,
Luca

War diese Antwort hilfreich?

thank you for your quick response, Luca. in this case, I understand. However regarding the market share changes, I'd like to under stand why we make the profit equals to 100,000? I calculated the profit margin would be 1/3.

thank you

Because in this case the market share is calculated considering the volumes of units sold

Hello!

Important concepts here:

• FIXED COSTS. they don´t vary with the output
• FIXED COST/UNIT: this refers to the 3 USD in the case. These are the total fixed costs/total units, hence, the allocation of total fixed cost per each unit. The more you produce, the smaller this number will be

Hope it helps!

Cheers,

Clara

War diese Antwort hilfreich?
Ian gab die beste Antwort
Content Creator
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
1.105
Meetings
79.401