Share
Explore BrainMass

Recommendations for the Phoenix STS program

Exercise 10.4
Two years have passed since the Phoenix STS program faced the loss of funding for its East Valley operations. During the two years, Phoenix STS has attempted to broaden the funding base of the entire program, but with particular emphasis on the East Valley service area. The program manager has just received an end of the accompanying fiscal year financial report showing revenues and expenses for the three transportation service areas. The report shows that overall the transportation program made a profit (had an excess of revenues over expenses) for the fiscal year. But for its East Valley operations, the transportation program had a loss. Based upon the financial report, the program manager decides to recommend discontinuing transportation services in the East Valley service area. Is this a good financial management decision? Why? Why not?

Solution Preview

Exercise 10.4
Two years have passed since the Phoenix STS program faced the loss of funding for its East Valley operations. During the two years, Phoenix STS has attempted to broaden the funding base of the entire program, but with particular emphasis on the East Valley service area. The program manager has just received an end of the accompanying fiscal year financial report showing revenues and expenses for the three transportation service areas. The report shows that overall the transportation program made a profit (had an excess of revenues over expenses) for the fiscal year. But for its East Valley operations, the transportation program had a loss. Based upon the financial report, the program manager decides to recommend discontinuing transportation services in the East Valley ...

Solution Summary

This is not a good financial management decision. First, a business does not make decisions to discontinue programs, products, etc. based upon financial statements alone. There are many other factors when deciding to discontinue services. There are additional questions the program manager needs to ask. For instance, what is the impact that the cancellation of the service to the community it serves.

$2.19