Shl Production Costs

Hi there,

Q: I am having a hard time solving it since I do not know the total production cost and all four costs should be in the pie chart. 

So the inputs are:

• Production = x
• Marketing = 0.3*x
• Distribution = 0.5*x
• Sales = 0.2*x

Assuming these are all the product costs, you have:

Production+Marketing+Distribution+Sales = 100%

 x+0.3x+0.5x+0.2x=100%

 2x=100%

 x=50%

So Prodution is 50%. You can then extrapolate that:

• Marketing = 15%
• Distribution = 25%
• Sales = 10%

Best,

Francesco

Hi there, 

In general, whenever you're stuck with a calculation question in consulting interviews, aim to convert it to an equation. 

In this case, you have an unknown variable x that represents the production cost. 

Then you have 3 other types of cost that are expressed as percentages of x. 

Distribution cost = 50% of production cost = 0.5 *x

Marketing cost = 30% of production cost = 0.3 * x

Sales cost: 20% of production cost = 0.2 * x

You then need to find then plot these 4 types of cost on a piechart, so basically showing all of them as percentages of 100.

x + 0.5x + 0.3x +0.2x = 100 

2x = 100

x = 50%

In short, 

Production cost is 50%

Distribution cost is 50% * 50% = 25%

Marketing cost is 50% * 30% = 15%

Sales cost is 50% * 20% = 10%

That's it. 

Best,

Cristian

Hi there,

adding one more thought to the other coaches' advice - try using smart numbers, when using variables feels too abstract. E.g. in this case, 

1. Set production cost = 100 
2. Derive the other cost factors based on the stated relationships
3.  Sum up all cost
4. Divide production cost by the total sum

Hope this helps. 

Regards, Andi

This is a super tricky one! Francesco and Cristian both have the right answer.

Remember, when you get tricky problems break them down.Write down what you know. Write down what you don't know. Then remind yourself what's needed. Step by step approach is the way!