Dr. Stephanie White,the Chief Admisnistrator of Uptown Clinic, a community menta
ID: 2367095 • Letter: D
Question
Dr. Stephanie White,the Chief Admisnistrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable furture but increasing demand for services. To plan for reduced budgets, she must first identify where cost can be cut or reduced and still keep the agency functioning. Below are some data from the past year. In an Excel Spreed sheet - Provide a dollar range of costs to reduce budgets (worst case and best case analysis).-She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
- In addition support your response by addressing the following:
Describe how managerial accounting is different from cost accounting.
-Describe the lean production philosophy
-Describe how you would advise Dr. White to prepare for reduced budgets
Program area Costs
Administration
Salaries:
Administor $60,000
Assistant $35,000
Two Secretaries $42,000
Supplies $35,000
Advertising and promotion $9,000
Professional meetings/dues $14,000
Purchased Services:
Accounting and billing $15,000
Custodial $13,000
Security $12,000
Consulting $10,000
Community Mental Health Services
Salaries (two social workers) $46,000
Transportation $10,000
Outpatient mental health treatment
Salaries:
Psychiatrist $86,000
Two Social Workers $70,000
Explanation / Answer
The areas to cut expenses: Assistant to the Administrator - $35,000 Cut One Secretary - 42,000 Reduce Supplies to a minimum - Cut $25,000 Eliminate Advertising and Promotion - $9,000 Reduce professional expenses to - cut $14,000 Eliminate Consulting - $10,000 Total cost savings: $135,000 Here are the reasons for the cuts proposed: The administrator does not need an assistant and still has one secretary to do the typing and filing, answering phones, etc. The assistant administrator is and has been, a luxury and not a necessity. In private business, assistants are considered an unnecessary business expense and a waste of overhead dollars. Get rid of the fat. There is too much spending on supplies. If you go around to everyone's desk and open up the drawers, they are full of unused pens and pads of paper. There is waste at the reproduction machine in terms of paper. Reduced staffing requires less paper, pens and reproduction. Require people to get along with LESS. Hand out one pen at a time, one pad of paper at a time. Supplies are always one of the first areas to cut unnecessary expenses. Eliminate advertising and promotion. Advertising is EXPENSIVE and proving that you are getting a return on your dollar investment is very difficult to do, even in private business. WORD OF MOUTH will do and that is good enough. This is an unnecessary expense in an established business with no NEW products or services to promote. Any returns on investment in this category are questionable AT THE VERY BEST. Get rid of the consultants. All you are doing is paying them to tell you how to run your own business. Consultants are not a cost effective way of running a business unless they are given very specific tasks and very specific deadlines. In a time of budget shortfall, such advise is a waste of money. You can run a business without consultants IF you know your own business well enough. They are an unnecessary overhead expense. The rest of the people are needed to continue operation and services.
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