How to check a raw-material surcharge
Multiply the evidenced material quantity per finished unit by the documented new material price minus the agreed base material price. Match units, currency and cost inclusions, then apply the result only to the agreed affected goods. Ask Cambridge China Bridge to check the factory evidence.
Fix the basis before checking the arithmetic
Ask for a calculation sheet identifying the product, specification revision, affected material, agreed base material price and proposed new input price. Record the price unit, currency, effective date and affected orders. Check whether the request concerns actual purchase costs or an agreed index formula; do not switch between them during the calculation.
Checking the arithmetic does not settle whether a price change is agreed. Use the contract price increase guide for that separate question. Keep this review focused on the material cost difference and its evidence.
Prove material usage per finished unit
Start with the approved BOM and drawing, then request weighing records, cutting plans or production material records supporting the quantity claimed. Separate material retained in the finished product from material consumed during manufacture. A finished sample's weight alone cannot establish purchased input usage where cutting, machining or moulding creates waste.
For a production reconciliation, compare material issued with unused returns, reusable material, scrap and accepted finished output. Explain rejects and rework separately. Agree the treatment of process loss and recovered scrap value, and avoid charging the same loss through both gross usage and an added allowance. Use the product specification guide to establish the material and configuration being checked.
Match the new cost to the agreed base
Request the material supplier's dated invoice, purchase order and receipt record, where available. Match the grade, form, dimensions, quantity and purchasing period to the affected production. Distinguish an indicative quotation from a completed purchase. If documents are redacted, keep the fields needed to trace the material and verify its cost visible.
Put both prices on the same basis: measurement unit, currency, delivery charges, tax treatment and discounts. Show rebates and credits separately. Ask how old stock and new purchases were allocated to the order; a higher replacement quotation does not demonstrate that all its material was bought at that price. Treat a proposed grade change through the material substitution guide.
Recalculate the surcharge by material
For each affected material, subtract the agreed base input price from the evidenced new input price, then multiply the difference by the agreed evidenced quantity consumed per finished unit. Add the material results to obtain the unit adjustment. Multiply that adjustment by the affected finished-unit quantity for the order total. Keep any agreed currency conversion visible and consistent.
Do not apply a raw-material price rise to the whole finished-product price. Keep labour, packaging, freight and margin changes separate unless expressly included in the agreed mechanism. Government pricing guidance describes cost-plus transparency as covering direct costs, overhead allocation and an agreed margin. Use that as a useful distinction when examining the supplier's breakdown.
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Record the decision and the next review
Return a marked calculation showing accepted inputs, missing evidence and disputed items. Record the approved unit adjustment, affected orders, stock treatment, effective date and review trigger. Agree how falling material costs will be handled and when a temporary surcharge ends. Keep the original base price visible so a later review does not charge an already accepted increase again.
If evidence is incomplete, identify the unresolved amount and request the specific records needed before approving it. Cambridge China Bridge's staff in China can help check factory usage records and purchasing documents against the calculation; the buyer should retain the approval record.
Frequently asked questions
How do I calculate a raw-material surcharge?
Subtract the agreed base material price from the evidenced new input price, then multiply by evidenced material usage per finished unit. Use matching units and currency, and total the affected materials.
Can I use the finished product's weight?
It can support net material content, but may exclude manufacturing waste. Check production records for gross input usage and agree how losses, reusable material and scrap credits are treated.
Is a commodity price chart enough evidence?
For an actual-cost calculation, request purchasing evidence for the relevant material and production period. A chart can support discussion; use an index calculation when that is the agreed mechanism.
Should the surcharge apply to existing stock?
Check the agreed mechanism and trace which stock supplies the affected order. For an actual-cost claim, ask the supplier to distinguish old-cost stock from material purchased at the new price.