Cost accounting and the lean production philosophy
As Dr. Stephanie White prepares to cope with the a steep reduction in the budgetary allocation to the Uptown Clinic she must carefully determine which areas to cut while striving to maintain current levels of service. This essay will offer advice Dr. White on preparing for budget cuts. It will also discuss the lean production philosophy and how this compares with typical production. This essay will also describe the differences between managerial accounting and cost accounting.
There are many strategies that Dr. White could employed to adequately mitigate the negative impact of reduced budgetary allocations to the Uptown Clinic. Before addressing where possible cuts could be made, she must remain cognizant of two important factors; budgetary cuts are likely to extend into the foreseeable future and demand for the clinic’s services are likely to increase. Any cuts must take these two factors into consideration. One of the most important things that Dr. White can do to prepare reduced budgets is to understand why the cuts are required. Is the clinic is financial trouble and unable to meet its payroll, overhead and other monetary obligations? Is there an operating deficit that makes the operation of the clinic unsustainable in its current configuration? Armed with this information Dr. White would be better prepared to determine the type or nature of the reductions to be made. These reductions may come in two forms. Across the board cuts reduce to portion of the budgetary allocation made to made section/department of the clinic. Targeted cuts on the other hand, seek to identify specific areas where cuts made be required (www.tgci.com) Once the nature of the reductions to be made have been determined, Dr. White can continue to prepare to these reductions by studying the impact these reductions are likely to have to have on the clinic’s...
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