Essay about Green Acres Seed Company

845 WordsApr 30, 20124 Pages
Green Acres Seed Company Statement Problem The latest financials on Green Acres seed corn sales were $43.2 million in 2010; however, 2010 profits were $339,000 below those of 2009, which caught management’s attention. The management team began to dig a little deeper, and noticed that all of its costs had been increasing over the period 2006 to 2010, specifically unit cost of sales, administrative costs, and sales costs. As a result, management hired a new national sales manager, Peter Jensen, who would be responsible for preparing a report to present his findings and recommendations on a new sales program to the executive committee. In reviewing the case, to follow are some items that Jenson must analyze in preparing his…show more content…
In looking at the exhibits, 25 sacks of seed at $210 / sack is equal to $5,250; however, the buyer is essentially only paying for 23 sacks and receives a $10 sales comission. This means that two free sacks of seed are equal to $420 with a commission of $10, which provides a total discount of $430, an 8.2 percent discount on total purchase. This simply tells us that spending on discounts and the sales force is the bigger expense in terms of the marketing budget. Customers Green Acres overall market share is less than two percent. Wisconsin is the best market at 4.9 percent. Iowa, Illinois, and Nebraska combine up for about 50 percent of the market. In order to determine the impact of gaining sales, let’s hypothetically look at Iowa gaining two percent in sales. Iowas total sacks are 2,521,600. Two percent of that is 50,432 sacks. Green Acres average revenue per sack is $43,229,000 total sales divided by 214,539 sacks equeal $201.50. Green Acres profit per dollar sack sold is $1,941 profit/$43,229 revenues equals 4.5 percent. Projected revenue from 2 percent Iowa share is 50,432 sacks multiplied by $201.50, equals $10,162,048. Projected profit from 2 percent Iowa share is $10,162,048 multiplied by .045, equals $457,292. This tells us that Green Acres could potentially grow themselves in the market to
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