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A and B are both close enough to the truth to indicate a profit margin of around 70%. There is room to quibble over the last few percent, no room to deny a heft
by Leonard_of_Q 2y ago
A and B are both close enough to the truth to indicate a profit margin of around 70%. There is room to quibble over the last few percent, no room to deny a hefty profit margin, hence It won't matter if they get it a few percent too low since actual profits will be far up in the double digits region.
- rahimnathwani 2y agoThe two options I gave are illustrative, and do not cover the complete range of possible answers. So you can't assume the 'true' answer (if it exists) lies within that range. I could reasonably argue that 100% of costs should be allocated to wool (after all, I'm a wool farmer, and mutton is just a byproduct!), or that 100% of costs should be allocated to mutton.
- Leonard_of_Q 2y agoThe options were illustrative but the numbers are plausible, it doesn't matter whether you use wool and mutton or bits and bytes as illustrations. That is what this is about, not the last few percent but the grand scale of the margin. That Apple takes to the IT-version of Hollywood Accounting [1] may be expected but does not need to be defended. [1] https://en.wikipedia.org/wiki/Hollywood_accounting https://en.wikipedia.org/wiki/Hollywood_accounting
- rahimnathwani 2y agoIn my original example, the profit on wool could be $0 (0% of revenue) or $1000 (100% of revenue), depending on how you allocate costs. So, if there's a true number, it's somewhere in the range 0% to 100%.