Fixed Versus Variable Costs
A foundational question for explaining operating leverage and building downside scenarios.
Explain fixed, variable and semi-variable costs. Why does the distinction matter when revenue falls below plan?
9 questions reported in McKinsey interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
Questions
Easy · Medium
Hard
Model builds
Built in the spreadsheet grid
Driver-based forecasts, variance analysis and forecast accuracy. 3 questions
A foundational question for explaining operating leverage and building downside scenarios.
Explain fixed, variable and semi-variable costs. Why does the distinction matter when revenue falls below plan?
Central to FP&A interviews. They want process, not spreadsheet skills.
Compare top-down and bottom-up forecasting. How would you build a revenue forecast for a business with 40% recurring and 60% transactional revenue, and how do you handle the fact that forecasts are…
A judgement-heavy FP&A question for candidates expected to influence senior operators.
Sales leaders consistently submit conservative forecasts so they can beat plan, while product leaders submit optimistic cost estimates to secure funding. How would you redesign the process without…
Adjacency analysis, competitive response and where advantage actually comes from. 3 questions
Used to test whether candidates look beyond revenue share.
What is a profit pool analysis and why is it useful in strategy work?
The step most strategy analyses skip, and the one that determines the outcome.
Your company is considering cutting prices 10% to gain share. How do you assess whether it will work?
The core corporate strategy question, and it appears in case form.
Your company wants to enter an adjacent market. How do you assess whether you have a right to win?
Merger models, accretion/dilution, purchase accounting and deal judgement. 1 question
Asked to test commercial judgement, not modeling ability.
Distinguish cost from revenue synergies. Which do you trust more and why? How should synergies affect the price a buyer is willing to pay?
Business quality, position sizing, benchmark risk and turnover discipline. 1 question
Common in research and growth investing interviews. Assume no internet access.
Estimate the annual revenue of the US coffee shop market. Show your reasoning, then tell me which assumption your answer is most sensitive to.
Project selection, returning capital and measuring per-share value. 1 question
Corporate development and strategic finance interviews use this as a structured case.
Your company wants to enter an adjacent market. Should you build the capability internally, acquire a company, or partner? Structure the analysis.
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with McKinsey.