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Allocation of snow expenses

Discussion in 'Business Fundamentals' started by JThompson, Feb 28, 2003.

  1. JThompson

    JThompson Member
    from NYC
    Messages: 71

    I am curious as to how you determine how, why and what expenses are snow management expenses when you use the same equipment for other services (such as landscaping). Some are easy: snow insurance, gas, plow costs, etc. But what about the truck itself? There are many less hours dedicated to snow services as opposed to landscaping yet the snow hours are much more demanding on the truck. Since plowing will shorten the life of the truck how much of the cost of the truck do you attribute to snow? When that transmission goes in June is it because of the beating it took due to snow services? How do you determine your snow expenses?
     
  2. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    We split vehicle expense by time.... Dec thru April for snow. If it breaks during winter - winter expense.

    Overhead we break out by percentage of revenue. If winter revenue is 80% of total revenues - 80% of overhead goes to winter expenses.

    People... depends what they're responsibility is. If it's snow - gets posted to snow expenses. If they work only landscape, so be it.... those that work both - get split by the calendar as we do with vehicle expenses.

    Might not be right, but no matter what, or how, you go about it - someone will not agree.
     
  3. JThompson

    JThompson Member
    from NYC
    Messages: 71

    Doesn't this give you wild variations as the amount of snow can greatly differ from year to year?

    BTW, what other services does your company do besides snow?
     
  4. John Allin

    John Allin PlowSite.com Addict
    Messages: 1,327

    While snow can vary, our revenues are growing steadily. Overhead is broken out by month and assigned accordingly, and although the bottom line net profit does change depending upon the amount of snow work done, the variable isn't all that great as we have a mix of seasonal, per push, and per event pricing which evens things out somewhat.

    We do landscape maintenance, installation, design/build, some irrigation installation/maintenance, deck construction, and some snow work in winter.