Hi Gurus, :)
If you are not 100% sure about the industry and what counts as fixed and variable costs, is it ok to ask or would the interviewer expect you derive from common sense and your business knowledge? (Financial Statements, etc.)
Thank you in advance
Hi Anonymous,
an interviewer would appreciate if you apply some common sense to the question. You can by all means state that you are unfamiliar with this particular industry, but that you extrapolate from XYZ industry that you know well. You can then state something like "I would like to quickly run through these cost buckets to double check my assumptions regarding fixed and variable costs". This leaves a much stronger impression than you just asking the interviewer to solve the problem for you.
Please note: even before doing all of this, it is crucial that you clearly and crisply explain why you want to categorize the cost in this way. This is how you demonstrate a solid hypothesis-driven approach towards solving the case (rather than exploratively diving into generic analyses)!
Cheers, Sidi
Hi Anonymous,
it’s totally ok to ask, but as mentioned in the other answers, you should ask in the right way. This means that:
Once done this it is fine to double check with the interviewer if your hypothesis was correct.
Best,
Francesco
I agree with other answers and recommend that you should at first try to use common sense and ask for validation to ensure you are not going down the wrong path. A good way to do that is using a phrasing like the following "I am not really familiar with this industry, however I believe the major cost buckets would be x,y,z. Is my understanding correctly or am I missing something?"
As stated, just asking what major cost components are would reflect poorly as dividing costs just in fixed and variable which would seem too superficial/"frameworky".
Hope it helps,
Andrea
Hi,
You don't necessarily have to lay out the costs in advance. Moreover, in most of the cases, it will be time-consuming and irrelevant. Usually, you split the costs into fixed and variable. Then I see the three options:
Best
Costs are segmented into fixed and variable costs, since these differ significantly with respect to dependency on activity and time-wise adaptability.
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