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The 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 with
by rahimnathwani 2y ago
The 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%.