Get Active in Our Amazing Community of Over 450,000 Peers!

Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Case Partners to connect and practice with!

Cost analysis

cost structure
Recent activity on Apr 14, 2019
2 Answers
2.1 k Views
Anonymous A asked on Apr 14, 2019

Hi all,

I am wondering for the COST structure, under what circumstance we use "Fix cost + Variable cost", and what circumstance "Capex + Opex" ?

Thanks !!

(edited)

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Sidi
Expert
updated an answer on Apr 14, 2019
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

You have to look at both! Depending on the context, most strategic problems require investments (Capex) which need to be recouped by operational profits (Revenue - Opex). The Operational Costs (Opex) then can be disaggregated either by fixed & variable costs, or along the value chain, or both (like a matrix). What makes sense in the particular situation is mainly governed by the kind of data available.

Cheers, Sidi

(edited)

Was this answer helpful?
Vlad
Expert
replied on Apr 14, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It depends on whether you are having investments in your case. In real life, most of the businesses have some Capex. Cases are usually simplified and you'll have fixed and variable costs unless the case assumes the investments. Then you should look at capex and opex (fix+var)

Best

Was this answer helpful?
How likely are you to recommend us to a friend or fellow student?
0
1
2
3
4
5
6
7
8
9
10
0 = Not likely
10 = Very likely