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Anonymous A

on Jul 03, 2023

Global

Question about

COS

How to realize that COS is fixed at €640 per bike and NOT relative to the sales price??

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Top answer

Cristian

Coach

on Jul 06, 2023

#1 rated McKinsey Coach

Hi there,

COS reflects the total value of the costs associated with that product.

If I decide to double the price the COS won't change, only the profits will.

Best,
Cristian

Ian

Coach

on Jul 03, 2023

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

Logic.

How much does is cost x factory to produce a bike?

Now, how much does it cost x factory to product the same bike if we double the price in the store?

The same.

This is part of business acumen which needs to be built!

Andi

Coach

on Jul 05, 2023

BCG 1st & Final Round interviewer | Personalized prep with >95% success rate | 7yrs coaching | Experienced Hires

Hi there,

as Ian mentioned, sales price and cost of sales are unrelated.

COS can be defined as “the accumulated total of all costs used to create a product or service, which has been sold”
Whether you increase or decrease the sales price of the bike doesn't change those cost to create the product or servcie
Hence, should not put them into relation - COS can be regarded fixed in this case.

Hope this helps.

Regards, Andi