# Columbus Park Waste Treatment Facility Case

Topics: Costs, Cost, Variable cost Pages: 2 (532 words) Published: October 15, 2012
A manager of any department is required to submit a budget for their department for the upcoming year so the company can properly allocate expenses and predict profitability. If a manager were to over or under budget their department it could potentially throw off the accounting books of a company. Having correct accounting books makes it viable for a company to progress forward and make changes in the company to be more profitable. A manager of the waste treatment facility for the city of Columbus Park, Illinois is in the process of preparing an annual expense budget for the upcoming year. Her plan is to over budget the department on purpose in case additional costs occur. Her logic is that the city controller usually gives out less money than on the budget and with the potential for the budget to possibly be higher for the upcoming year; she knows she won’t get a promotion unless she stays within the budget. I will calculate the estimated budget for the year and analyze if over budgeting her department is ethical. Ann Paxton is preparing an expense budget for the upcoming year that should look like this: Expenses:

Variable Costs (9,000,000 gallons of waste X \$.20 per gallon)\$1,800,000 Fixed Costs\$1,400,000
Total Costs\$3,200,000
Ann Paxton’s proposed Budget\$3,900,000
As you can see Ann’s proposed budget is \$700,000 more than she would need. Considering a potential 500,000 gallons of additional waste would only cost the department \$100,000 and a new labor contract would increase costs by \$200,000, the additional \$700,000 added to the budget by Ann seems to be over the top. A reasonable projected budget, all things considered, would be \$3,500,000.

This is by no means an ethical decision based on the information provided above. Ann’s only incentive for creating an expense budget that is more than needed is her promotion. She knows that if she does not meet her projected budget next year her chances of getting a promotion decline....