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University of d

Faculty of Management
Business Management 3rd year
Authors:
Piotr Bartenbach
Bartomiej Staszczyk
Dominik Wolski

Finnegan's Gardens - Case Study

Strategic Management Accounting

ach
zczyk
ski

- Case Study

Exercise #1
Design
FTEs
FTE Cost
Direct Labor Cost
DLC Cost
Direct Materials
Direct Mat. Cost
Direct Labor Cost
Direct Labor Cost

2
32630.43
369600
116842.80
0
0.00
0
0.00

Installation Maintenance
7.2
4.6
117469.57
75050.00
117600
225000
37177.25
71129.95
369000
42000
202141.97
23008.03
1500
1200
125083.33
100066.67

Exercise #2

Total revenue
Expenses:
Plants, sod
Direct labor
Other materials, sup
Payroll and receptio
Purchasing, account
Vehicle depreciation
Equipment depreciat
IT systems depreciat
Office rent utilities
Nursery rent, utilit
TOTAL EXPENSES
Net profit (loss)
Profit margin

Without overhead allocation


Total
Design
Instalation
$1,280,000.00 $180,000.00
$820,000.00
$411,000.00
$369,600.00
$38,400.00
$49,000.00
$31,000.00
$28,000.00
$18,750.00
$14,000.00
$30,000.00
$25,000.00
$1,014,750.00
$265,250.00
21%

$0.00
$117,600.00
$5,400.00

$369,000.00
$225,000.00
$24,600.00

$123,000.00
$57,000.00
32%

$618,600.00
$201,400.00
25%

With overhead allocation


by
Total
Design
Instalation
Total revenue
$1,280,000.00 $180,000.00
$820,000.00
Expenses:
Plants, sod
$411,000.00
$0.00
$369,000.00
Direct labor
$369,600.00 $117,600.00
$225,000.00
Other materials, sup
$38,400.00
$5,400.00
$24,600.00
Payroll and receptio
$49,000.00
Purchasing, account
$31,000.00
Vehicle depreciation
$28,000.00
Equipment depreciat
$18,750.00
IT systems depreciat
$14,000.00
Office rent utilities
$30,000.00
Nursery rent, utilit
$25,000.00
TOTAL EXPENSES
$1,014,750.00 $123,000.00
$618,600.00
Net profit (loss)
$265,250.00
$57,000.00
$201,400.00
Profit margin
21%
32%
25%
Overhead
225150.00
32630.43
117469.57

Net profit (loss)


Profit margin

147650.00
14.55%

$24,369.57
14%

$83,930.43
10%

With overhead allocation


Total
Design
Total revenue
$1,280,000.00 $180,000.00
Expenses:
Plants, sod
$411,000.00
$0.00
Direct labor
$369,600.00 $117,600.00
Other materials, sup
$38,400.00
$5,400.00
Payroll and receptio
$49,000.00
Purchasing, account
$31,000.00
Vehicle depreciation
$28,000.00
Equipment depreciat
$18,750.00
IT systems depreciat
$14,000.00
Office rent utilities
$30,000.00
Nursery rent, utilit
$25,000.00
TOTAL EXPENSES
$1,014,750.00 $123,000.00
Net profit (loss)
$265,250.00
$57,000.00
Profit margin
21%
32%
Overhead
225150.00
0.00
Net profit (loss)
147650.00
$57,000.00
Profit margin
14.55%
32%

by
Instalation
$820,000.00
$369,000.00
$225,000.00
$24,600.00

$618,600.00
$201,400.00
25%
202141.97
-$741.97
0%

Exercise #3
FTE

Net profit (loss)


Profit margin

Design
24369.6
14%

Instalation
83930.4
10%

Direct Labor Cost

Net profit (loss)


Profit margin

-59842.8
-33%

164222.7
20%

Direct Materials

Net profit (loss)


Profit margin

57000.0
32%

-742.0
0%

Direct Labor

Net profit (loss)


Profit margin

57000.0
32%

76316.7
9%

Average

Net profit (loss)


Profit margin

19631.7
11%

80932.0
10%

In our opinion, the most attractive service line is Installation, because it generates the
highest profits (except when calculating with overhead allocated by usage of direct
materials). However, margin-wise, this line is the least attractive. It is caused by high costs
that are generated by high level of usage of materials and labor. Taking into consideration
the fact, that clients often use maintenance services after using other services, it is hard to
take this line as the most financially attractive, because we don't know how it would be
profitable if we exclude clients of design and installation services.

highest profits (except when calculating with overhead allocated by usage of direct
materials). However, margin-wise, this line is the least attractive. It is caused by high costs
that are generated by high level of usage of materials and labor. Taking into consideration
the fact, that clients often use maintenance services after using other services, it is hard to
take this line as the most financially attractive, because we don't know how it would be
profitable if we exclude clients of design and installation services.

Exercise #4
FTE

Net profit (loss)


Profit margin

Design
42369.6
21%

Instalation
165930.4
18%

Direct Labor Cost

Net profit (loss)


Profit margin

-41842.8
-21%

246222.7
27%

Direct Materials

Net profit (loss)


Profit margin

75000.0
38%

81258.0
9%

Direct Labor

Net profit (loss)


Profit margin

75000.0
38%

158316.7
18%

Average

Net profit (loss)


Profit margin

37631.7
19%

162932.0
18%

In our opinion Finnegan should expand both Design and Installation lines as in this industry,
the client usually first wants to have the garden designed and then installed. Maintenance is
usually the natural consequence of the previous services so they shouldn't focus on
developing it in a way that it would cause the other lines to grow less.

Total
13.8

Overhead
225150

712200
411000
2700

cation
Maintanace
Administration
$280,000.00
$0.00
$42,000.00
$115,200.00
$8,400.00

$165,600.00
$114,400.00
41%
FTE
Maintanace
$280,000.00
$42,000.00
$115,200.00
$8,400.00

$165,600.00
$114,400.00
41%
75050.00

$0.00
$29,400.00
$0.00
$49,000.00
$31,000.00
$28,000.00
$18,750.00
$14,000.00
$30,000.00
$25,000.00
$225,150.00
-$225,150.00

With overhead allocation


Total
Design
Total revenue
$1,280,000.00 $180,000.00
Expenses:
Plants, sod
$411,000.00
$0.00
Direct labor
$369,600.00 $117,600.00
Other materials, supp
$38,400.00
$5,400.00
Payroll and reception
$49,000.00
Purchasing, accounts
$31,000.00
Vehicle depreciation
$28,000.00
Equipment depreciati
$18,750.00
IT systems depreciati
$14,000.00
Office rent utilities
$30,000.00
Nursery rent, utiliti
$25,000.00
TOTAL EXPENSES
$1,014,750.00 $123,000.00
Net profit (loss)
$265,250.00 $57,000.00
Profit margin
21%
32%
Overhead
225150.00
116842.80

$39,350.00
14%
Direct Materials
Maintanace
$280,000.00
$42,000.00
$115,200.00
$8,400.00

$165,600.00
$114,400.00
41%
23008.03
$91,391.97
33%

Maintanace
39350.0
14%
43270.1
15%
91392.0
33%
14333.3
5%
47086.3
17%

ause it generates the


by usage of direct
It is caused by high costs
Taking into consideration
ther services, it is hard to
know how it would be

Net profit (loss)


Profit margin

147650.00 -$59,842.80
14.55%
-33%

With overhead allocation


Total
Design
Total revenue
$1,280,000.00 $180,000.00
Expenses:
Plants, sod
$411,000.00
$0.00
Direct labor
$369,600.00 $117,600.00
Other materials, supp
$38,400.00
$5,400.00
Payroll and reception
$49,000.00
Purchasing, accounts
$31,000.00
Vehicle depreciation
$28,000.00
Equipment depreciati
$18,750.00
IT systems depreciati
$14,000.00
Office rent utilities
$30,000.00
Nursery rent, utiliti
$25,000.00
TOTAL EXPENSES
$1,014,750.00 $123,000.00
Net profit (loss)
$265,250.00 $57,000.00
Profit margin
21%
32%
Overhead
225150.00
0.00
Net profit (loss)
147650.00 $57,000.00
Profit margin
14.55%
32%

Maintanace
67350.0
22%
71270.1
23%
119392.0
39%
42333.3
14%
75086.3
24%

on lines as in this industry,


n installed. Maintenance is
shouldn't focus on
ess.

by Direct Labor Costs


Instalation
Maintanace
$820,000.00
$280,000.00
$369,000.00
$225,000.00
$24,600.00

$42,000.00
$115,200.00
$8,400.00

$618,600.00
$201,400.00
25%
37177.25

$165,600.00
$114,400.00
41%
71129.95

$164,222.75
20%

$43,270.05
15%

by
Instalation
$820,000.00

Direct Labor
Maintanace
$280,000.00

$369,000.00
$225,000.00
$24,600.00

$42,000.00
$115,200.00
$8,400.00

$618,600.00
$201,400.00
25%
125083.33
$76,316.67
9%

$165,600.00
$114,400.00
41%
100066.67
$14,333.33
5%

With overhead allocation


by
FTE
Total
Design
Instalation
Maintanace
Total reven $1,408,000.00 $198,000.00 $902,000.00
$308,000.00
Expenses:
Plants, sod $411,000.00
$0.00 $369,000.00
$42,000.00
Direct labo $369,600.00 $117,600.00 $225,000.00
$115,200.00
Other mater $38,400.00
$5,400.00 $24,600.00
$8,400.00
Payroll and
$49,000.00
Purchasing
$31,000.00
Vehicle dep
$28,000.00
Equipment
$18,750.00
IT systems
$14,000.00
Office rent
$30,000.00
Nursery ren
$25,000.00
TOTAL EXP $1,014,750.00 $123,000.00 $618,600.00
$165,600.00
Net profit ( $393,250.00 $75,000.00 $283,400.00
$142,400.00
Profit marg
28%
38%
31%
46%
Overhead
225150.00
32630.43
117469.57
75050.00
Net profit (
275650.00 $42,369.57 $165,930.43
$67,350.00
Profit marg
27.16%
21%
18%
22%
With overhead allocation
by Direct Materials
Total
Design
Instalation
Maintanace
Total reven $1,408,000.00 $198,000.00 $902,000.00
$308,000.00
Expenses:
Plants, sod $411,000.00
$0.00 $369,000.00
$42,000.00
Direct labo $369,600.00 $117,600.00 $225,000.00
$115,200.00
Other mater $38,400.00
$5,400.00 $24,600.00
$8,400.00
Payroll and
$49,000.00
Purchasing
$31,000.00
Vehicle dep
$28,000.00
Equipment
$18,750.00
IT systems
$14,000.00
Office rent
$30,000.00
Nursery ren
$25,000.00
TOTAL EXP $1,014,750.00 $123,000.00 $618,600.00
$165,600.00
Net profit ( $393,250.00 $75,000.00 $283,400.00
$142,400.00
Profit marg
28%
38%
31%
46%
Overhead
225150.00
0.00
202141.97
23008.03
Net profit (
275650.00 $75,000.00 $81,258.03
$119,391.97
Profit marg
27.16%
38%
9%
39%

With overhead allocation


by Direct Labor Costs
Total
Design
Instalation
Maintanace
Total reven $1,408,000.00 $198,000.00 $902,000.00
$308,000.00
Expenses:
Plants, sod $411,000.00
$0.00 $369,000.00
$42,000.00
Direct labo $369,600.00 $117,600.00 $225,000.00
$115,200.00
Other mater $38,400.00
$5,400.00 $24,600.00
$8,400.00
Payroll and
$49,000.00
Purchasing
$31,000.00
Vehicle dep
$28,000.00
Equipment
$18,750.00
IT systems
$14,000.00
Office rent
$30,000.00
Nursery ren
$25,000.00
TOTAL EXP $1,014,750.00 $123,000.00 $618,600.00
$165,600.00
Net profit ( $393,250.00 $75,000.00 $283,400.00
$142,400.00
Profit marg
28%
38%
31%
46%
Overhead
225150.00
116842.80
37177.25
71129.95
Net profit (
275650.00 -$41,842.80 $246,222.75
$71,270.05
Profit marg
27.16%
-21%
27%
23%
With overhead allocation
by
Direct Labor
Total
Design
Instalation
Maintanace
Total reven $1,408,000.00 $198,000.00 $902,000.00
$308,000.00
Expenses:
Plants, sod $411,000.00
$0.00 $369,000.00
$42,000.00
Direct labo $369,600.00 $117,600.00 $225,000.00
$115,200.00
Other mater $38,400.00
$5,400.00 $24,600.00
$8,400.00
Payroll and
$49,000.00
Purchasing
$31,000.00
Vehicle dep
$28,000.00
Equipment
$18,750.00
IT systems
$14,000.00
Office rent
$30,000.00
Nursery ren
$25,000.00
TOTAL EXP $1,014,750.00 $123,000.00 $618,600.00
$165,600.00
Net profit ( $393,250.00 $75,000.00 $283,400.00
$142,400.00
Profit marg
28%
38%
31%
46%
Overhead
225150.00
0.00
125083.33
100066.67
Net profit (
275650.00 $75,000.00 $158,316.67
$42,333.33
Profit marg
27.16%
38%
18%
14%

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