...Comparing Cost Control Strategies Kristy Barbeau HCR/230 Wednesday January 22, 2014 Beth Schalm Comparing Cost Control Strategies Employer sponsored insurance falls under what is called group health plans. When an employee has this coverage the group are the ones that are the policyholders. The health care plans are negotiated through the human resources department and they select what plans to offer the employee. Most plans are the basic plans and that is where the riders come in. what riders mean is it gives the employee the option to choose what health care plan they want to choose. These options may include vision and dental add-ons. Another rider could be services such as massages, nutrition counseling, and possible vitamin supplements. Some insurance plans would not cover these things. It just depends on the plan that is chosen. An employer may also choose the Federal Employee Health Benefits Program (FEHB), which happens to be the largest health care program that the employers use. However, the government controls this plan. This is the plan they use for the government workers, people who retired from the government, and their families. Another plan that employers use is the Self-Funded Health Plans. This is for many large companies to ensure the cost of the employees’ medical benefits come from them rather than buying them from different insurance companies. This plan is basically a self-insured plan but the employer sets the level of benefits the employee gets...
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...best described as ‘fashion’ stationery. In this case, all the members of our group had interview the general manager, the finance manager, the sales and marketing managers, the operations manager and the inventory planner of the distribution company. Our teams had prepaid some questions and investigate the whole company. We find that some problems in each division and provide some recommendations to solve problems. INTRODUCTION With the rapid growth of globalization, logistic management has become increasingly important in our daily life. The efficient logistic service could increase the mobility of products and it also could make sure their products safety and speed. In addition, the efficient logistic service will also provide low cost when trading among countries (Marti, L 2014). De...
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...(ETO) measured two components of cost: direct labor and burden, but the burden is grouped into a single cost pool that includes all costs and divided by direct labor dollars to obtain the burden rate. (Q2) ETO’s manager picked up 5 components to evaluate the impact of different accounting system. The reported costs from existing system can be computed as follows, given the burden rate 145%: Product ICA ICB Capacitor Amplifier Diode Direct Labor 917 2,051 1,094 525 519 Burden 1,330 2,974 1,586 761 753 Total Costs 2,247 5,025 2,680 1,286 1,272 Based on the accounting manger’s proposal, the operation burden can be divided into machine-hour and direct labor burden. We use the revised burden rate 21% and machine-hour rate $80.1 to show the updated costs: Product ICA ICB Capacitor Amplifier Diode Direct Labor 917 2,051 1,094 525 519 Burden 193 431 230 110 109 Machine Hour 18.50 40.00 7.50 5.00 12.00 Machine Burden 1,482 3,204 601 401 961 Total Costs 2,591 5,686 1,924 1,036 1,589 If ETO follows the consultant’s recommend, treats the main test room and mechanical test room as different cost pools. The three-burden-pool system reports the cost: ($63.34 for main room burden rate and $112.63 for mechanical room) Product ICA ICB Capacitor Amplifier Diode Direct Labor 917 2,051 1,094 525 519 Burden 193 431 230 110 109 Main Room Mech. Test Room Hour Room Hour Burden 8.50 10.00 1,665 14.00 26.00 3,815 3.00 4.50 697 4.00 1.00 366 7.00 5.00 1,007 Total Costs 2,774 6,297 2,021 1,001 1,635 ...
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...role of health care managers when comparing productive and non productive time? First we must know what is productive time and non productive time. Non productive time is the time not directly associated with manufacturing operations or performance of a job or task. Productive time is the time associated with manufacturing operations or performance of a job or task. Health care manager roles can vary base on the type of facility they are working for. In hospital health care manager oversee one department of the hospital with other department managers. In clinic or doctor office one manager may oversee the entire facility. The most visible form of adverse cost “is the time away from work.” However productive time will also be cost where workers are not able to work with total efficiency. Poor working condition can also cost non productive time. Managers have to aware of all things dealing with productive and non productive time. There is no evaluation of healthcare staffing that would be complete without a look at cost. Cost is last because of a combination of two factors quality of the worker and production. The cost of temporary healthcare staff is not expensive compared to the cost of staff a permanent staff member. The more staff the staff the more funds you will need for their salary. When funds aren’t available then that will leave a rise in healthcare services. Imagine if your hire staff for a job, and you only worked in a certain cost. What happens when one staff gets...
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...FREEZER COMPANY Question 1: When comparing performance during the first five months of 2004 with performance in 2003, which warehouse shows the most improvement? St. Louis is the only one showing any improvement, using cost per unit shipped as the performance criterion. The cost for the first five months of 2003 was $9.97 and for the first five months of 2004, it fell to $9.07. Question 2: When comparing performance during the first five months of 2004 with performance in 2003, which warehouse shows the poorest change in performance? The worst change is the company’s own warehouse (located in Fargo), where costs per unit shipped increased 31%. Among the public warehouses used, Denver was the worst in terms of cost per unit handled. It is also the most expensive public warehouse that Brant uses. Question 3: When comparisons are made among all eight warehouses, which one do you think does the best job for the Brant Company? What criteria did you use? Why? Using the cost per unit handled criterion, St. Louis does the best job, closely followed by Chicago. Question 4: J.Q. is aggressive and is going to recommend that his father cancel the contract with one of the warehouses and give that business to a competing warehouse in the same city. J.Q. feels that when word of this gets around, the other warehouses they use will “shape up.” Which of the seven should J.Q. recommend be dropped? Why? Denver has the lowest volume and highest unit costs among all the public warehouses used...
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...(t = 1,..,12) Parameters: Dt = # of units (000s) demanded in time period t (t = 1,…12) Problem 8-1: Minimize [pic] Subject to: Inventory constraints: [pic] [pic] Overtime constraints: [pic] Production constraints: [pic] Workforce constraints: [pic] (a) Worksheet 8.1 provides the solution to this problem and the corresponding aggregate plan. The total cost of the plan is $360,400,000. (b) If the number of overtime hours per employee were increased from 20 to 40 it would result in decreasing the total cost to $356,450,000. So, it is advantageous to do it. (c) If the number of employees is decreased to 1200 and the overtime hours per employee are held at 20 and 40 then the total costs of the plan are $363,324,000 and $357,422,000, respectively. If the number of employees is increased to 1300 and the overtime hours per employee are held at 20 and 40 then the total costs of the plan are $358,790,000 and $356,270,000, respectively. So, the value of additional overtime increases as workforce size decreases. (d) We add a new constraint: [pic]. The cost will be $363,049,982. Problem 8-2: We now include the subcontract option in the model: Minimize [pic] Subject to: Inventory constraints: [pic]...
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...2012 I. OVERVIEW OF THE CASE The city of Peachtree is comparing two plans for supplying water to a newly developed subdivision. Below are the proposed plans for the subdivision: PLAN A Initial Cost Subsequent Cost Replacement Cost Operating Costs (1st year$19,000 15th year) Operating Costs (16th $182,000 year-20th year) Operating Costs (16th year $155,000 and onwards) Operating Costs (21st year $185,000 and onwards) *Operating Costs are on a yearly base. PLAN B $1,950,000 ---$350,000 $1,500,000 $3,000,000 $200,000 $105,000 TABLE 1. Summary of Costs for Plan A and Plan B II. PROBLEM STATEMENT In order to choose the best plan for water supply to the newly developed subdivision, a comparison of the two plans will be presented. The decision on which plan shall be used will be based on the equivalent annual cost of each proposal. The plan with the lower equivalent annual cost shall be chosen and recommended since it is more likely that it will charge less than the other. III. SOLUTION METHODOLOGY To compare the equivalent annual cost of Plan A and Plan B, the Future Worth Method shall be utilized. PLAN A Figure 1. Cash Flow Diagram of Plan A PLAN B Figure 2. Cash Flow Diagram of Plan B Based on the data above, Plan A yields a greater annual cost with $6,476,955.4050 $5,644,713.1070. The concept of Future Worth Method was used in order to know the possible annual cost after each plan has been implemented so that the city of...
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...Contents Task 1: Applying costs concepts to decision making process 2 1.1Explaining the importance of costs in pricing strategy 2 1.2 Designing costing and pricing system 2 1.3 Recommending proposal 4 Task 2 Application of forecasting techniques 5 2.1 Forecasting Techniques 5 2.2 Sources of Funds for the Expansion of ABZ Ltd 6 Task 3 Participating in the Budgeting Process 10 3.1 Selecting appropriate budgetary targets 10 3.2 Preparing Master Budget 11 3.3 Comparing Actual expenditure and income with master budget 12 3.4 Impact of Lack Budget Monitoring Process Policy 12 4.1 Process in Managing Cost Reduction 14 4.2 Potential for the Use of Activity-Based Costing (ABC) 15 5.1 Applying financial appraisal methods 16 5.2 Evaluating and recommending suitable project 16 5.3 Reporting appropriate strategic investment decision 18 Task 5 Interpreting Financial Statements 18 6.1 Analyzing Financial Statements 18 6.2 Applying Financial ratios 18 6.3 Recommending Strategic portfolio management 20 References 21 Task 1: Applying costs concepts to decision making process 1.1Explaining the importance of costs in pricing strategy Cost can be looked upon as one of the most important elements of the process of taking pricing decisions and implementation of pricing strategies. Particularly, companies that adopt cost based pricing strategy, utilizes manufacturing and production costs as the basis of pricing (Brag, 2001). Cost considerations on the part...
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...1. ABC revised product costs for 4 pens: Indirect labor (3 activities) ($20,000) a. .50 scheduling/ handling production runs= b. .40 physical changeover= c. .10 maintain records on 4 products Operate. Computer systems: ($10,000) a. .80 included in production run activity b. .20 keep records on 4 products Machines ($14000) a. Machine depreciation b. Machine maintenance c. Energy to operate machines Direct labor= 20,000+8000 (fringe benefits) = 28000 Indirect labor= 20,000+8000 (fringe) =28000 See Excel file for product costs calculations and new profit margins Comparing two profit margins Traditional vs. ABC Blue Black Red Purple Total Traditional 13.6% 13.3% 14.8% 18.2% 13.5% Profit Margin ABC 21.6% 22.67% -44% -200% 14% 2. Looking at the new product costs per unit (using ABC) the cost per unit for each product is much different then found under traditional. The cost per unit found under the ABC method was different than what the unit price for each product was being sold for. For blue and black pens the company was making a profit on each pen there were selling (comparing $1.18 product cost for blue and $1.16 for black which were each being sold for 1.50). Red pens cost $2.23 each to make and were being sold for 1.55 each which resulted in a loss. Purple pens were losing the company even more money with costing 4.95 to produce but were only being sold for 1.65 per pen. Under further calculations using the ABC method it was found that blue was the...
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...Discuss how the current operations can be improved through better cost controls Custom Snowboards is currently using a traditional costing method. While this method can be beneficial to some companies, CS is lacking with their operational expenses and overall results utilizing it. By using this costing method Custom Snowboards is grouping their costs together under one overhead item and getting the cost for production. With CS growing and expanding, it is important that they find a better way to determine and estimate production and their earnings. When considering which costing method would be most beneficial to CS it is important to analyze how each method would impact the company. The Activity Based Costing Method (ABC) identifies the activities that are performed by a company and then assigns indirect costs to products. This system recognizes the relationship between costs, activities and products, and through this relationship assigns indirect costs to products less arbitrarily than traditional methods. (Investopedia, 2014) This method is generally beneficially to companies that deal with manufacturing. Now that CS is starting to create custom snowboards they are going to be comparing the total costs for material and labor between the regular and customized snowboards. The total direct costs or materials and labor for both the traditional and ABC costing method is $3,375,143 for the regular snowboard and $1,177,344 for the personalized product. With the company...
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...to determine the level of sales that is requiredfor the company to start earning a profit. Helps understand and formulate the relationship between costs (fixed and variable), output and profit Helps quickly observe profit levels at different outputs. In a wide product range, the analysis helps to find out which products are performing well andwhich are leading to losses. The technique can be used to set sales targets and/or prices to generate target profits It is also versatile enough to include items like donations, wage increases, etc. that directly or indirectly affect costs. Conclusions and Recommendations We can conclude that the use of break-even point analysis is to give a measure of risk, not of profitability. Break-even point enables to assess the degree of risk of a company’s cost structure. A planning tool that useful to forecast financial needs.CVP analysis is not for discontinuing decisions. A negative/positive UCM is not the only relevantcriteria to decide whether or not to drop a product. CVP analysis is insufficient for discontinuingdecisions (outsourcing, change in the product portfolio, etc..) and need to know the nature of fixed costs(direct and indirect) and what are the direct avoidable versus indirect largely unavoidable cost.CVP analysis is not for comparing products. Basic UCMs usually do not tell us which productsshould be pushed. Contrary to UCMs, unit contribution margins per unit of scarce resource are notmisleading...
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...Modeling the Cost Implications of Using Carboxymethylcellulose Dressing Compared with Gauze Danielle Oliver Breckinridge Nursing School In partial Fulfillment of the requirements of TB133 Strategies for the Technical Professional David Balin September 25, 2013 Introduction This papers’ objective is to estimate the costs of using carboxymethylcellulose dressing (CMCD or Hydrofiber) compared to gauze in managing surgical wounds healing by secondary intention in the U.S. and the U.K. Most sutured wounds will heal within the time they’re supposed to and without ever having a problem. However, for a wound to heal properly depends on internal and external factors that can result in complications. For example, a wound will heal much slower if there is sign of an infection, or wound dehiscence (the bursting open of a surgically closed wound) or the presence of foreign material. If this happens, the wounds become hollow and would need to heal by secondary intention (wound left open to heal from the inside out). Other surgical wounds that are not as serious and don’t need stitches such as abscesses, are left to heal by secondary intention. And wounds healing by secondary intention need to be “filled with new tissue via granulation, epithelialization (consisting of cells joined by small amounts of cementing substances), and maturation” (to produce or discharge pus, as a wound). (Guest & Ruiz, 2005) Wounds healing by secondary intention are thought...
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...there is usually something that must be given up or traded to accomplish that. In Chapter 1 of our material, efficiency vs. equity is discussed which helps further explain this principal. Society is always desiring to obtain the most for their money; getting the best they can. This is called efficiency. While trying to get the most out of our everyday decisions, we must also consider equity and making sure that the economic prosperity of our decisions is fairly distributed. The second principal goes hand-in-hand with the first. “Because people face trade-offs, making decisions requires comparing the costs and benefits of alternative courses of action” (Mankiw, 2007, p.5). To make the decision of what goals we are going to strive for, it is imperative to consider if the goal is worth the item(s) being given up. Is it worth not being able to do something else? How much money is it going to cost to obtain this goal or item? How much of my personal time is needed to accomplish this goal? These are all questions that must be asked and evaluated prior to making economic decisions. The third principal of individual economic decision-making relates to marginal decision-making. Rational people will think at the marginal level, making small changes or tweaks in their plans to achieve the desired objective. Rational people...
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...Company Background Forest Hill Paper Company (FHPC) is a small company manufacturing a line of paperboard products in answer to a cyclical economic environment. FHPC is trying to provide greater customer service and satisfaction by providing a full product line. Paperboard products are sold in large reels/rolls which are offered with 20 different grades of thickness, with an option for surface smoothing coating and one for the option of having slits/cuts. Managers know that in a cyclical economy supply and demand can be at polar ends. During high demand times finding suitable substitutes is an issue as it can cause customer dissatisfaction. As they are in a high demand economic time currently they are looking for ways to be more cost management effective before the downturn occurs. We will analyze FHPC issues to determine which costing system would serve to improve both profitability and provide a strategy for a cyclical economy. 1. How would you classify FHPC in terms of size and ownership? As the article states, FHPC is a small, privately owned and seems to held tightly by family members. 2. What is the nature of the industry in which FHPC competes? The paperboard industry is one which has to operate under fluctuating conditions that has wide economic swings every three to four years. As well as being a fluctuating one it is also highly competitive. In recent years FHPC has experienced some loss due to customer interest in more environmentally...
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...Assignment2: Patelco (B) Case Study 1. Develop minimum cost staffing plans for each of the 4 call centers. Substitute the data we got from the case study: into formula: . When Wq<1, minimum “C for ASA” can be found. Thus run the excel sheet based on the formula we can get the minimum cost staffing plans. Minimum “C for ASA” for each call centers and employees’ 8-hour shifts are such as the following: The total “C for ASA” for each call center is: 271, 67, 57, and 73. The number of minimum stuff for each center is: 23, 6, 5, and 6. The total number of the staffs needed in four call centers is 23+6+5+6= 40 people. 2. What’s the effect on costs of staff when ASA=10s? (General Call Center) ASA=1 when it was 60s, so ASA=0.17 when it turns to 10s. So the numbers “C for ASA” changed as illustrated in picture1, and the manual solution changed as illustrated in picture2. Picture1 Picture2 We can see that as the ASA requirement is reduced to 10 seconds, in order to let Wq less than 0.17, more staffs are needed. The total “C for ASA” here is 318, 47 more than the situation of 60 seconds. And the total number of staff is 27, 4 more people are needed comparing to the situation of 60 seconds. 3. ASA=60s. Cross selling proposal: Average call length increase to 5 minutes. What’s the effect? What cross-sell capture ratio will make this a cost effective proposition? In this case, μ turns to be 60s/300s...
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