Hello Marcelo,

You raised a good point but if you read carefully the text, the problem of your client is not the absolute value of the margin, but the profit margin. For this reason, the fact that incidence of the indirect costs per unit has not change, means that the problem of the lower profit margin is something else.

That being said, your point is good and it would be nice to tell your interviewer that you identified this new room for efficiency (I would recommend at the end of the case). Please be aware that indirect costs are not always completely not correlated to the sales. For example, in this case the increase in the sales could be caused by a new and more expensive marketing campaing. In that case it would not be so obvious that you could cut these costs to increase your profit.

Hope it helps,

Luca