None were really difficult, but I had diffculty answering anything that required impromptu math. I'm a spreadsheet guy. I.e. if you could buy the same quantity of two products one with a 10% margin and a higher cost and one with a 20% margin and a lower cost which would you buy?

Question

None were really difficult, but I had diffculty answering anything that required impromptu math.  I'm a spreadsheet guy.  I.e. if you could buy the same quantity of two products one with a 10% margin and a higher cost and one with a 20% margin and a lower cost which would you buy?

Sigiloso · Accepted Answer

You would have to look at other qualitative data (ie. consumer response) - Lets say the qty is 100 units of each.  If Prod A is $200, 10% margin = $20 and Prod B is $100, 20% margin = $20.  same thing.  Look at demand forecast.

Sigiloso · Answer

I answered the lower cost item because of the higher margin, but because of the qty restriction it actually makes sense to buy the lower margin more expensive item because you will net higher profits.

Sal · Answer

$1.5 x 100 = $150 x 10% = $15
$1.0 x 100 = $100 x 20% = $20

Higher Cost/Lower Margin is a better option

amazono · Answer

depending on the cost of the item you can either choose option A or B,
if cost for product A is $100, margin being 100 and cost for Product B is $50, margin being the same 100.
Choose A when cost of B is cheaper than $50.
Choose B when cost of B is higher than $50.
So the main variable is the cost, and the answer is strictly based on the revenue from % margin.
However, I guess you can add that the answer could differ if we consider quantity, customer service, etc...

amazono · Answer

*forgot to add the quantity: 100

Pei · Answer

Depends which one the customer votes for or which one I would sell more of.  At the end, Margin $ out weighs Margin %.

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