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

Why are Cost of Sales fixed here?

Everything else in this case seems fairly straight forward (the calculations and short term/long term strategy element at the end), but I'm struggling to understand why the interviewee should pick up the fact that cost of sales are fixed. 

Am I wrong in my understanding that cost of sales and COGS are interchangeable? In which case if we are selling less bikes from one year to the next, this should be reflected in a change in cost of sales. 

1
5.3k
44
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Sidi
Coach
on Apr 20, 2020
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 400+ candidates secure MBB offers

Hi!

This is an unfortunate wording in the case notes. What they mean ist that the Cost of Sales are fixed per unit (i.e., per bike), since it makes up a fixed percentage of the revenue.

In the overall context, Cost of Sales are of course variable, depending on the number of bikes produced/sold.

Cheers, Sidi

on Apr 20, 2020
Thanks for clearing that up Sidi, as you say the wording in the interviewee prompt is quite unclear here I think
Similar Questions
Consulting
Just did the Mckinsey Solve Game (January 2025) - got some questions/insights
on Apr 24, 2025
Global
5
3.2k
Top answer by
Hagen
Coach
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience
35
5 Answers
3.2k Views
+2
Consulting
Has anyone tried any of the AI Interview Tools for MBB before?
on Mar 25, 2025
Global
10
13.4k
Top answer by
Iman
Coach
Systemiq | Ex-BCG | 10 years experience with 8+ specialising in sustainability | Free Intro | Ex-PrepLounge candidate
348
10 Answers
13.4k Views
+7
Consulting
Employment Gap on Resume and How to talk about it during Interview
on Apr 14, 2025
Global
9
7.7k
Top answer by
Ariadna
Coach
BCG | Project Leader and Experienced Interviewer | MBA at London Business School
110
9 Answers
7.7k Views
+6
How likely are you to recommend us to a friend or fellow student?
0 = Not likely
10 = Very likely
Thanks for your feedback! Your opinion helps us make PrepLounge even better.