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Financial and Managerial Accounting
Financial and Managerial Accounting
Financial and Managerial Accounting
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Cost Management
On page 92 of our text it says that committed costs are costs arising from the possession of facilities, equipment, and a basic organization. Discretionary costs are determined by management as part of the periodic planning process in order to meet the organization’s goals. They have no obvious relationship with levels of capacity or output activity. Therefore my assumptions of Committed and Discretionary costs are as follows.
Committed Costs Discretionary Costs
Administrator $60,000 Assistant $35,000
Accounting and Billing $15,000 Two Secretaries $42,000
Consulting $10,000 Supplies $35,000
Salaries $46,000 Advertising and
Promotion $9,000
Transportation $10,000 Professional Meetings and Dues $14,000
Security $12,000 Two Social Workers $70,000
Custodial $13,000
Totals $166,000 Totals $205,000
When I first took a look at this assignment, I thought it would be a bit difficult to prove my point by using the text as a reference guide. I did that my citing the definition, but I am going to rely on what I know as a manager of a business to answer these questions and I was told that real world experiences are sometimes better that citing them from a text. Therefore, I am going to take a stab at this.
I feel that Dr. White needs to take a look at theses areas-
* Salaries (for assistant and two secretaries and for two social workers)
* Supplies
* Advertising and Promotion
* Professional Meetings and Dues
My first question as I was reading this assignment was: What do they need with an Assistant and two secretaries? Where do they hold their meetings? What do they need two social workers in each of the two areas for? Why are they spending $35,000 in supplies? I also referred back to my previous classes in team work and producing a greater output in half the time. This is not needed here. This is a mental health facility and as hard as it might be at times, they can cut the two secretaries to the administrator. I believe that one would suffice and the administrator has an assistant. They can also cut the social workers down to one per shift area, or one for community health and one for mental health. This outpatient clinic has operational costs of $371,000 with $205,000 being what I ...
... middle of paper ...
...clinic’s long-run prospects. (Managerial Accounting pg 93) I am simply recommending a reduction in certain areas of the clinic.
In any business, when one becomes accustomed to functioning in a certain manner; it is difficult to identify and separate what is costing you money, particularly if it is personnel. I am very familiar with this as this is one area where I am forced to make a lot of cuts. A lot of times it is like cutting your nose off to spite your face. I will honestly admit that this is one area that is the absolute hardest for me, as these people become like family. Advertising and promotional items are essential to any business but when you spend more money to promote a company, than what you are bringing in, you have a serious problem. Therefore, with this said, I would advise Dr. White to prepare for a reduced budget by analyzing what is costing her the most money, and make a decision in those areas as to how to scale them back. It will not be an easy task, but I feel that I have offered her some viable alternatives.
Works Cited
www.nationalpen.com
Horngren/Sundem/Stratton-Introduction to Management Accounting, 2005, Upper Saddle River, New Jersey.
In addition to this business plan, we must also address the financial issues plaguing this organization. To illustrate some of these issues lets look at some of the trends here at OCB and within our Industry: For example, OCB’s clinic operations profitability in 1990 was 60%, and now in 1996 our profitability is only 37%, which is down 23 percentage points! We can blame some of this on rising costs of overhead, consumables, etc, however this is happening as the industry as a whole is growing 5% annually, and as our customer base, largely senior citizens, population is growing at almost 1% as year. We should be capitalizing on these industry trends, however, as you all know, not all the trends work in our favor. For example, our lifeblood, the Insurance company’s managed care organizations, and government healthcare reimbursement programs shows a downward trend of allowable payments for our services (DRGs) For example in 1995 the DRG price of ...
First, let us analyze General Practice Affiliates’ current financial position. The income and expenses report shows a net revenue of $230,250. The net revenue is obtained after expenses, including taxes, of the company have been subtracted from revenue (Paterson, 2014, p. 124). The balance sheet shows a $306,180 in retained earnings. Retained earnings represent stakeholders’ equity (Paterson, 2014, p. 128). Retained earnings are usually invested back in the form of inventory or debt payments (Albrecht, Stice, Stice , & Swain, 2008). General Practice Affiliates’ cash flow analysis shows that the practice invests in new equipment. However, General Practice Affiliates mainly used cash during 2012. The main source of cash from operations came from depreciation expense, which is not a reliable source of funding (Paterson, 2014, p. 130). Accounts receivable increased by $50,000, while accounts payable only increased by $10,000. In addition, cash flow analysis shows a balance sheet data that is affected by future transactions (Paterson, 2014, p. 128). General Practice Affiliates choose to stretch the time to pay suppliers instead of paying its bills. ...
Buchbinder, S.B., Shanks. N. (2007). Introduction to healthcare management. Sudbury, Mass: Jones and Bartlett Publishers Inc.
Buchbinder, S. B., & Shanks, N. A. (2007). Managing Costs and Revenues. In (Ed.), Introduction to Healthcare Management ( ed., p. pp. -). : . []. doi: Retrieved from
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