Cost Management Essay

1054 Words 5 Pages
Cost Management

On page 92 of our text it says that committed costs are costs arising from the possession of facilities, equipment, and a basic organization. Discretionary costs are determined by management as part of the periodic planning process in order to meet the organization’s goals. They have no obvious relationship with levels of capacity or output activity. Therefore my assumptions of Committed and Discretionary costs are as follows.
Committed Costs Discretionary Costs
Administrator $60,000 Assistant $35,000
Accounting and Billing $15,000 Two Secretaries $42,000
Consulting $10,000 Supplies $35,000
Salaries $46,000 Advertising and
Promotion $9,000
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As a matter of fact, my boss is a penny pincher! He is always asking me how I can prove that I need more paper clips when 100,000 walk out the door each year. I explained to him that not only do we use them in all areas of the bowling center for paper work, but every single time we make a bank deposit there goes more. It may seem kind of trivial, but do you see my point?

It is very difficult to have to make a decision to eliminate positions. I recently had to do that too. It definitely is not one of the perks of the job, but in some cases, it must be done. Salaries are flexible in some cases, and either cutting them or eliminating the positions altogether would save approximately $79,000 per year. I did this by eliminating the need for 1 of the 2 secretaries and 2 of the 4 social workers. Now, let’s look at the meeting and dues costs. Where are these meetings held at; The Four Seasons? This is a lot of money on meetings and dues. Unfortunately, you cannot do a lot about paying out dues, but you can consider the functions you are joining. Joining the American Medical Association is a must but the county band boosters are not. If these meetings are dinner meetings, scale them back. Have these meetings at lunch where menu items are cheaper, or better yet, do a breakfast meeting where coffee and pastries are inexpensive. This is the kind of meetings we have, or we have meetings period. No food, just a bunch of people in a room with

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