Greenlawn Commercial Package Business
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
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