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?

Dear Carl,

I hope this email finds you well. I wanted to provide you with some information regarding the California Container division's operations and finances. Based on the information you've provided in your email, here's what I've calculated:

Break-Even Point:

To calculate the break-even point, we need to determine the point at which the fixed and variable costs of the operation balance out. The fixed monthly cost of $257,000 represents the costs that are incurred regardless of the volume of product sold, such as rent, salaries, and insurance. The variable costs, on the other hand, include the cost of materials, labor, and overhead directly associated with producing and delivering the product.

For the previous model, the break-even point was at a volume of 3.3 million packages. At this point, the variable costs of $1.37 per package were equal to the fixed costs of $257,000 divided by the number of packages delivered (3.3 million).

However, with the increase in cardboard supply costs due to the fuel surcharge, the break-even point has likely shifted. To calculate the new break-even point, we need to include the additional costs associated with the increased cardboard cost. We can use the following formula:

Total Cost = Fixed Costs + Variable Cost * Quantity

We know that the fixed costs are $257,000 per month and the variable costs will now be $1.52 per package (the previous price of $1.37 plus the $0.15 fuel surcharge). We don't know the new quantity, but we can set it equal to the break-even point and solve for it:

$257,000 + ($1.52 * Quantity) = 3,300,000

Solving for quantity, we get a new break-even point of 3.59 million packages. So with the new cardboard supply costs, you would need to produce approximately 290,000 more packages to achieve the same break-even point as before.

Profit Calculation:

To calculate the profit, we need to determine the revenue from the sales of the packaging and deduct the total costs. The revenue is determined by multiplying the number of packages sold by the sales