Preparing for Reduced Budgets; Discretionary versus Committed Costs

Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future, but increasing demand for services. In order to plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Attached are some data from the past year. 1. Identify which costs you think are likely to be discretionary or committed costs. 2. One possibility is to eliminate all discretionary costs. What do you think of this recommendation? 3. How would you advise Dr. White to prepare for reduced budgets?

Production planning

Adequate inspection and safe storage are important to proper control of materials in production planning. Why?

Activity Based Costing

An Organization has been thinking about implementing Activity base costing. The organization has asked you to prepare a summary of activity base costing. Compare , contrast and identify common themes among all of these concepts: a) Activity Based Costing b) Balanced Scorecard c) Economic Value Added

Variable overhead costs

The Minnetonka Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The company is considering the production of cross-country skis. After considerable research, a cross-country ski line has been developed. Because of the conservative nature of the company management, however, Minnetonka's president has decided to introduce only one type of the new skis for this coming winter. If the product is a success, further expansion in future years will be initiated. The ski selected is a mass-market ski with a special binding. It will be sold to wholesalers for $80 per pair. Because of availabi... click for more

Describe how you would measure performance in each of these areas

The following multiple goals were identified by General Electric: · Profitability · Market position · Productivity · Product Leadership · Personnel Development · Employee attitudes · Public responsibility · Balance between short-range and long-range goals General Electric is a huge, highly decentralized corporation. At the time it developed these goals, GE had approximately 170 responsibility centers called "departments," but this is a deceptive term. In most other companies, these departments would be called divisions. For example, some GE departments had sales of more than $500 million. Each department manager's performance was evaluated annually in relation to t... click for more