Hello everyone!
Today I have been doing some practices regarding the BCG Potential Test, however I found the following questions which I don't know how to solve it.
I appreciate your help.
Thank you very much.
(edited)
BCG Potential Test Sample Question
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Hi Floyd,
In regards to #1 you have to figure out what % of total revenues the "Other Costs" equals. The NBA's other costs are $10M and they have total revenues of $65M (5+10+50). As such, their other costs are 15.38%.
If our client could have the same cost structure, their "Other Costs" would be $4.77 ($31M times 15.38%). As such, their additional profit would be 5.33 (Current Other Costs of $10M minus the new costs of $4.77 = added pure profit).
Adding the additional profit to their existing profit gets us $7.33M, so the answer is C - $7M
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