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. Below are some data from the past year.
Program Area Costs
Administration
Salaries:
Administrator $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
Identify which costs you think are likely to be discretionary or
committed costs.
One possibility is to eliminate all discretionary costs. What do you
think of this recommendation?
How would you advise Dr. White to prepare for reduced budgets?
Business Homework Solutions
#16738
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?
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