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

Yale case book wrong answer - would like to confirm

Hi, There is a case on Yale case book, the answer says: "Our client will save $6,000/year in costs and suffer a maximum reduction of $1,500/year in profits.  This is a net gain of $4,500/year". Just want to clarify this statement is wrong. The net gain should be 1500/year, not 4500/year. 

Thanks

Freda

1
3.2k
12
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Anonymous B
on Sep 06, 2017

Hi Freda,

I disagree with your interpretation.

Look at both components individually:

If you save $6000 in costs, your net gain is $6k.

If you lose $1.5k in profits, your net loss is $1.5k.

Add both numbers and find the answer to be correct.

Best
Björn

3
on Sep 06, 2017
Thank you!
on Sep 26, 2017
Hi, thank you for this answer! I am actually also struggling to understand the solution of this case, and why the company would experience a "net gain" by shutting down one product segment that has a profit of $1,500/year and a cost of $6,000/year. When does it make sense to stop one product segment to reduce costs, when this specific product is still profitable? I guess it depends on the profit margin of the other products; any thoughts on that?
Similar Questions
Consulting
How should I explain a change in course at university? Will it be asked of me?
on Apr 14, 2025
Global
10
3.7k
Top answer by
Alessa
Coach
xMcKinsey & Company | xBCG | +200 individual & group coachings | feel free to schedule a 15 min intro call for free
81
10 Answers
3.7k Views
+7
Consulting
Just did the Mckinsey Solve Game (January 2025) - got some questions/insights
on Apr 24, 2025
Global
5
3.9k
Top answer by
Hagen
Coach
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience
42
5 Answers
3.9k Views
+2
Consulting
Want IAPP AIGP (Artificial Intelligence Governance Professional) Exam sample Questions
on Apr 14, 2025
Global
4
2.5k
Top answer by
Hagen
Coach
#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience
56
4 Answers
2.5k Views
+1
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.