Survey Masters LLC Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Questions

Comment on the analyses prepared by Linda Evans in Exhibit 2. Why do smaller projects appear to be more or at least equally profitable as larger projects?
Use the information in Exhibit 3 on overhead spending and activities to prepare analyses of the profitability of larger (20 projects) and smaller (100 projects) projects undertaken by Survey Masters in 2006. What are your conclusions about the relationship between project size and project profitability?
Should Survey Masters continue to take all projects offered to the company? Why or why not? On which size of project should they focus their sales efforts? Should they refuse to take on larger or smaller projects in the future? What should be their strategy in selecting future projects to undertake with clients?
Suppose that Survey Masters decides to only take on larger client projects, but not enlarge its professional staff (i.e. maintain the level of project salaries at $800,000). Prepare a projection of income for 2007 for the strategy that you proposed in question 3 above.

Survey Masters LLC (A)

Question 1

By analyzing the Survey Master Forma Income for the Panel 2A that is prepared by the Linda Evans, it is concluded that the smallest 100 projects are more profitable as compared to the largest 20 projects. Furthermore, the revenue of the project for largest 20 projects is $1,300,000 that is less than the project revenue for the smallest 100 projects that is $1,500,000, so the difference between the project revenue is $200,000. The salaries of the project in the both largest 20 projects and smallest 100 projects are same with the value of ($400,000).

Whereas, the cost of overhead expense allocation for both the largest 20 projects and smallest 100 projects are also the same, that is an amount of ($700,000). Moreover, the Net income for the largest 20 projects is $200,000 as compared to the Net income for the smallest 100 projects that is $200,000. The Net income of smallest 100 projects is $200,000 more than the largest 20 projects which shows that the smallest projects are more gainful in comparison with the largest projects.

Additionally, by examining the Survey Master Forma Income for the Panel 2B that is prepared by the Linda Evans, it is concluded that the smallest 60 projects are as profitable as the largest 60 projects. Furthermore, the revenue of the project for largest 60 projects is $1, 950,000 that is more than the project revenue for the smallest 60 projects that is $850,000, so the difference between the project revenue is $1,100,000. The salaries of the project for both largest 60 projects and smallest 60 projects are ($600,000) and ($200,000) respectively. The cost of overhead expense allocation for both the largest 20 projects and smallest 100 projects are calculated as ($1,050,000) and ($350,000) separately.

However, net income of both the smallest 60 projects as well as the largest 60 projects showing that the smallest and largest projects are equally profitable.

Question 2

By using the information from Exhibit 3 of the case, the overhead expense for conducting both larger and smaller projects has been evaluated (Exhibit 1). It is determined from the analysis that the larger projects are more profitable as compare to the smaller projects after allocating the overhead expenses for both types of projects individually.

The total overhead expenses, including both larger and smaller projects for the year 2006 was $1,400,000.In addition to this, the overhead cost of conducting smaller projects during the year 2006 was $1,072,143 that in percentage is 77% of total projects overhead expenses. Whereas, the overhead cost of conducting larger projects during the year 2006 was $ $327,857 that in percentage is 23%. This shows that the cost of conducting the smaller projects is more as compared to the expenses for conducing larger projects. Furthermore, the smaller projects have much lower level of profitability, as it is also expected that most of the profit in the smaller projects come from the larger of the smaller projects.

So, it is concluded that the larger projects are better in term of cost and profitability than the smaller projects. Also, the smaller projects require a large number of days as well as trips for survey and day collection in order to complete 100 projects.

However the Net income for the year 2006 is also calculated (Exhibit 2). The Net income from conducting the smallest 100 projects is $27,857 whereas Net income for conducting the largest 20 projects is $572, 143 showing that the largest 20 projects are more profitable in comparison to the smallest 100 projects...............

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survey masters case study solution

Partners in service firms are reviewing the results for the year 2006, I wonder whether it is large or small projects are more profitable. Submit reports to do small projects in order to look more attractive. However, activity-based accounting shows that large projects are more profitable, and that focusing on the sale of large projects have the potential for greater profit in the service of the company. "Hide
by William J. Bruns Jr. Source: Harvard Business School 5 pages. Publication Date: Mar 08, 2007. Prod. #: 107061-PDF-ENG