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    Budgeting for Dr. Stephanie White

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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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    https://brainmass.com/business/capital-budgeting/94010

    Solution Preview

    In the worst case analysis, it means that the costs need to be cut at the extreme level and keep only the most critical services as follows: -

    Administration
    Salaries:
    Administrator $60,000
    Assistant 0
    One Secretary $21,000
    Supplies $17,500
    Advertising and promotion 0
    Professional meetings/dues 0

    Purchased Services:
    Accounting and billing $15,000
    Custodial $13,000
    Security $12,000
    Consulting 0

    Community Mental Health Services
    Salary (one social worker) $23,000
    Transportation $10,000

    Outpatient mental health treatment
    Salaries:
    Psychiatrist $86,000
    One Social Worker $35,000
    Total $282,500

    In the best case analysis, only some of the costs that will not affect the services of the community health agency will be cut as follows: -

    Administration
    Salaries:
    Administrator $60,000
    Assistant $35,000
    One ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer the request of the assignment in more than 600 of text.

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