Cost ManagementThis essay Cost Management is available for you on Essays24.com! Search Term Papers, College Essay Examples and Free Essays on Essays24.com - full papers database.
Autor: anton • November 2, 2010 • 1,082 Words (5 Pages) • 865 Views
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
Transportation $10,000 Professional Meetings and Dues $14,000
Security $12,000 Two Social Workers $70,000
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)
* 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 see as discretionary costs. We have almost 30 people in the bowling center and I know that including salaries, we are in good shape. As a matter of fact, my boss is a penny pincher! He is always asking me how I can prove that I need more paper clips when 100,000 walk out the door each year. I explained to him that not only do we use them in all areas of the bowling center for paper work, but every single time we make a bank deposit there goes more. It may seem kind of trivial, but do you see my point?
It is very difficult to have to make a decision to eliminate positions. I recently had to do that too. It definitely is not one of the perks of the job, but in some cases, it must be done. Salaries are flexible in some cases, and either cutting them or eliminating the positions altogether would save approximately $79,000 per year. I did this by eliminating the need for 1 of the 2 secretaries and 2 of the 4 social workers.
Now, let's look at the meeting and dues costs. Where are these meetings held at; The Four Seasons? This is a lot of money on meetings and dues. Unfortunately, you cannot do a lot about paying out dues, but you can consider the functions you are joining. Joining the American Medical Association is a must but the county band boosters are not. If these