This email is sent to you in the hope that it finds you well. You are currently facing an increase in supplies costs for California Container division. I am specifically aware of the.15 fuel surcharge and the increased cost of cardboard. To help you see the effect of this change on your business, I’ve done calculations.
The information you provided indicates that the California Container division had 3.3 million package break-even points. It was calculated by subtracting your $257,000 fixed monthly cost from the variance between package prices ($3.24) and variable costs ($1.37).
Packages will now cost $1.52 more due to the increased fuel surcharge. The new California Container division break-even point will be 3.68 millions packages.
You will need approximately 380,000 packages to achieve the same profit margin as before fuel surcharge. This was calculated by multiplying the difference between the old and new break-even points (3.3 million – 3.68 million) by the price of the package ($3.24).
It’s important to consider that these calculations are based on the information provided and assumptions about the fixed and variable costs. To make educated decisions about the division, it would be helpful to do a deeper analysis of costs and pricing strategies.
If you have questions, or need additional information, please let me know.