Cost of transport quantitative analysis

Question

Hi, when the cost of transport is calculated for the upcoming year, it states the number 20M, but we have decided previously to cut the <5€ product, so the transport cost should be now 15% lower as we would be transporting 15% less. Therefore, if we assume that the 20% could be saved from consolidating suppliers, we should take, before or after, the 15% of the product. I don't know if I am missing something, but what I have is:

Last year transport cost: 20M → New year transport cost (with old strategy for importing): 17M (85%volume*20M) → New year transport cost (with consolidated suppliers): 13.6M(17M-20%of17M reduction by consolidating)

This gives the profit for the new year as:

141.6M + 3M + 3.4M = 148M

I might be missing something, so let me know if it should be done the other way!

Answer 1

Hi Jaime,

I *think* you're right. I didn't write the case so am not 100% sure. But having a quick look I agree with you

Answer 2

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Answer 3

Yes, that seems to be right.