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    Management Accounting : key information

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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.

    See the attached file (data from the past year) and answer the following questions. You can use Excel to calculate.

    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?

    © BrainMass Inc. brainmass.com May 20, 2020, 1:10 pm ad1c9bdddf
    https://brainmass.com/business/accounting/management-accounting-key-information-42284

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    COSTS LIKELY TO BE DISCRETIONARY
    Program Area Costs
    Administration
    Purchased Services:
    Accounting and billing
    $15,000
    Custodial
    $13,000
    Security
    $12,000
    Consulting
    $10,000
    Community Mental Health Services:
    Transportation $10,000

    COSTS LIKELY TO BE COMMITTED
    Program Area Costs
    Administration
    Salaries:
    Administrator
    $60,000
    Assistant
    $35,000
    Two Secretaries
    $42,000
    Community Mental Health Services
    Salaries (two social workers) $46,000
    Outpatient mental health treatment
    Salaries:
    Psychiatrist
    $86,000
    Two Social Workers
    $70,000

    ELIMINATING ALL DISCRETIONARY COSTS WOULD
    Reduce the costs by $60,000. However, I would not advice Dr. White to take such a ...

    Solution Summary

    The costs you think are likely to be discretionary or committed costs are identified.

    $2.19

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