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    Identify Where Costs Can Be Cut or Reduced: Dr. Stephanie White, Chief Administrator of Uptown Clinic

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    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

    Give a dollar range of costs to reduce budgets (worst and best case analysis).

    You need to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.

    How would you advise Dr. White to prepare for reduced budgets?

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    Solution Preview

    Identify where costs can be cut or reduced.

    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

    Give a dollar range of costs to reduce budgets (worst and best case analysis).

    In the worst case situation, it means that the budgets have been cut to the extent that Dr. White could keep only the necessary and most critical services as follows:

    Administration
    Salaries:
    *Administrator $60,000
    *Assistant ...

    Solution Summary

    This solution explains the calculations needed to identify where costs can be cut or reduced. The solution also discusses how the student should advise Dr. White in 322 words based on these calculations.

    $2.19

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