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Essay Available:
Pages:
2 pages/β‰ˆ550 words
Sources:
2 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 9.36
Topic:

Managerial Email

Essay Instructions:

For the final submission of your Key Assignment, incorporate the feedback that you have received from your classmates and instructor.

In addition, incorporate the following into your final assignment.

You received an email from Carl the operations manager from the California Container division. They produce packaging for cell phones. Carl understands that his product is an important cash producer for the company.

  • The delivery price is based on long term contracts.
  • The price of the supply of cardboard has increased due to a .15 fuel surcharge added to the cost. 
  • Carl has a fixed monthly cost of $257,000 and delivers 3.3 million packages in the same time period for a price of $3.24.
  • The variable cost of the previous package was a $1.37.

Provide the following information to Carl in an email

  • At what volume was the old break-even and what is the new break-even?
  • In order to make the same profit how many more packages needs to be produced?

In addition, incorporate the following into your final assignment. You received an email from Carl the operations manager from the California Container division. They produce packaging for cell phones. Carl understands that his product is an important cash producer for the company. • The delivery price is based on long term contracts. • The price of the supply of cardboard has increased due to a .15 fuel surcharge added to the cost. • Carl has a fixed monthly cost of $257,000 and delivers 3.3 million packages in the same time period for a price of $3.24. • The variable cost of the previous package was a $1.37. Provide the following information to Carl in an email • At what volume was the old break-even and what is the new break-even? • In order to make the same profit how many more packages needs to be produced?

Essay Sample Content Preview:

Managerial Email
Name
Course
Instructor
Date
Hello
The cost volume analysis will help to show the interrelations that affect business operations, and hence will be beneficial in making decisions (Hansen et al., 2009). Thus, this analysis will help to highlight on the need to focus on the optimal mix of products to sell depending on the interaction between the cost and volume of products. The additional 0.15 surcharge will no doubt affect the business operations and further analysis will help to highlight on this. Thus, the assumption that the variable cost per unit remains constant does not hold because of the surcharge, which introduces a new dimension in calculating the variable cost. This analysis will also be an important indicator of the level at which profitability is not optimal.
The break even point equates the total cost of production with the total revenue. Given that the variable cost per unit is given the break even point is fixed costs divided by the contribution margin this is $257,000/ 1.87= 137,433.16 units and the Break even points total sales should be 445,283 units. The costs measures that are the most applicable for the company will depend on the analysis, because this will show potential savings from diverse blend of costs and quantity.
Following the introduction of the 0.15 surcharge, the variable cost per unit increases to $1.52 where the new contribution margin is $ 1.72 being $3, 24 - $1.52. Similarly, the new break even point in quantity is $ 257,000 divided by the new contributing margin being 257,000/ 1. 72, which is $ 149,418 and total sales is $ 484,116. The contribution margin is relevant for decision making because it depends on the selling price ...
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