Why do we need info on labor & Operating expenses of cat lavatories when it is already clearly making a loss?

Question

The exhibits shared and some of the info provided on the profitability of business cat lavatories already make it a 100% loss making concern. I could solve the case without the additional info provided below that states the costs asssociated with the business. Do we really need the below info and if so why?

"Labor expenses in the production of cat lavatories and other operating expenses for the production of cat lavatories amount to EUR 5 million per year in the past financial year. Because of appropriate contracts, costs correlate with sales of cat lavatories with a coefficient of 1. (Consequently: Reduction of turnover by 50% reduces costs by 50%, reduction of turnover by 100% reduces costs by 100%, etc.)."

Answer 1

Hi Navid,

I agree. Even if you could not reduce labor expenses and other operating expenses, you would still close the business as the price just covers the cost of raw materials...

Not the smartest of cases ;)

Best,

John

Answer 2

Hi there, Seconding the others coaches here: You are just listing words. Consultants don't list words. They think and... (read entire answer)

Hi there, Seconding the others coaches here: You are just listing words. Consultants don't list words. They think and break down a problem systematically. PLEASE read this artic... (read entire answer)

Answer 3

Please do NOT do REVENUE - COST. That is not a framework and is super generic. I appreciate you saying “seemed like... (read entire answer)

Please do NOT do REVENUE - COST. That is not a framework and is super generic. I appreciate you saying “seemed like a simple profitability case” as this is a misnomer! Every p... (read entire answer)

Answer 4

Noooooooooooooooooooooo. Thank you for this Q&A, as it's SUCH a good example of what NOT to do. Every project has roo... (read entire answer)

Noooooooooooooooooooooo. Thank you for this Q&A, as it's SUCH a good example of what NOT to do. Every project has root-cause analysis. Every project has solutions. Every profit... (read entire answer)