Greenlawn Commercial Package Business

Topics: Term, Income statement, Variable cost Pages: 3 (651 words) Published: October 9, 2011
Case Study: Greenlawn commercial package business
Darden business publishing

Budgets: Average regional commercial package business
Analysis and comparison
Before After Calculation/Explanation
Activity drivers for average region:
Commercial package clients 5,000 5,000 Average applications/client/season 5 3 New # of applications decreasing Capacity/truck (applications/season) 410 405 15000/37 Trucks required/region 61 37 15000/408 (12 apps*34 wk season=408 apps per truck)

Revenues 10,000,000 6,000,000 $400 per applic*15000 apps Direct Costs:
Lease expenses on trucks 793,000 481,000 37 trucks*13K avg annual lease cost Sevice technicians 2,415,600 1,884,168 22% decrease in 2,415,600 orig cost Fertilizers, pesticides, etc. 3,111,000 1,368,840 56% decrease in 3,111,000 orig cost Fuel, insurance and other operating costs 683,200 901,824 32% increase in 683,200 original cost Total Direct Costs 7,002,800 4,635,832

Contribution on direct costs 2,997,200 1,364,168

Marketing, sales and promotional expenses 1,100,000 660,000 1.1M/10m revs=11% overhead. 11%*6m revs Regional administrative costs 645,000 645,000 same, no change Contribution 1,252,200 59,168

Contribution margin %13%1%

1- Amy is at the cross roads of two options.
See revised calculation above with the cost reductions/increases with the new plan for transforming Greenlawn, Inc.’s commercial package division. Amy’s new era project is considered a major advancement for the division. Introducing a new generation of products that bring significant benefits to the organization as well as its customers in the Maryland tri-state area business will continue Greenlawn’s pioneering spirit as well as reputation in the industry. Amy can keep the family business running as it...
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