Making a Financial Case

The current cost system allocates overhead costs once a year, as a function of direct labor dollars. This allocation strategy results in:

Finally, in order to complete a more accurate comparison between the two projects, we utilized the EANPV as the deciding factor. Under current accepted financial practice, NPV is generally considered the most accurate method of predicting the performance of a potential project. The duration of the projects is different, one lasts four years and one lasts six years. To account for the variation in time frames for the projects and to further refine our selection we calculated the EANPV to compare performance on a yearly basis.

And once a new person supported was taken on-board, the support service supervisor selects a team which would support the individual, and the support workers working in the team can report to any of the case managers. A support worker would report to one particular case manager for performance appraisal purpose, but can work on any of the teams under any of the case managers. Thus initially, this structure was successful, as it reduced the work load and burnout, by making the support workers spend less time on each case, thus accommodating vacations and sick coverage. But as the organization grew and more cases were taken on-board, it became more challenging as each support worker was working for many case managers and ended up working more hours, and support workers’ performance appraisal, scheduling was impacted. Thus this cross-reporting structure impacted the employees and organization. Multiple managers, conflicting policies and procedures, and contradictory loyalties can often lead to ineffective management. Conflicts may occur between team managers, who are forced to compete for the time of the individual team members and leads to operational inefficiency and increased costs.

The Business and Partnership Unit is client liaison team for of all existing and new partnerships with an ambition to deliver efficiencies and improve services. To evidence transparency of the Councils partnerships by implementing an approved monitoring regime. To provide

First, she needs to payoff her credit cards with the money she has on her savings account. She is actually going to save money by doing this because the credit cards charge interest rates much higher than the 1.5% she is getting from her savings account.

Capital expenditure budget. This budget is needed when an organization needs to invest in major projects and equipments, such as purchases of new products, new information technology systems, in which a management team will conduct a financial evaluation to determine whether the company’s return on investments will be met (Halliman, 2006).

Glaser Health Products manufactures medical items for the health care industry. Production involves machining, assembly and painting. Finished units are then packed and shipped. The financial controller is interested to introduce an activity-based costing (ABC) system to allocate (or distribute) indirect costs to products. Indirect costs, as distinct from direct costs, cannot be unambiguously linked to specific products. The controller would like to calculate product costs based on ABC for planning and control, not inventory valuation.

1. What specific items of capital should be included in the SIVMED’s WACC? Should before-tax or after-tax values be included? Should historical or new values be used? Why?

Mayfield charged a budget-based management fee to appeal to potential LPs. Because industry practice was traditionally a 2/20 based fee, Mayfield had a competitive advantage against other VCs as the budget-based fee was attractive because:

According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.

Overhead costs include rent, office staff, depreciation, and other. Once the flexible budget was complete, variances between the actual and flexible budget could be calculated (Exhibit B). The variance for frame assembly was favorable with actual costs being $82,663 less than in the flexible budget. The variances for wheel and final assembly however were both unfavorable. Wheel assembly had an unfavorable variance of $50,650, while final assembly variance was the highest at an unfavorable variance of $231,200. Taking into account these three aspects of direct cost, direct cost has an unfavorable variance $199,187. Although most overhead costs are fixed, 2/3 of other costs are variable and increase with the increased production. As shown in Exhibit B, overhead variance is unfavorable at $60,000. The direct cost variance and overhead variable together lead to a total unfavorable variance of $259,187.

Capital allowances are the amount that can be deducted from the income tax for wear and tear of qualifying fixed assets which purchased and used in the business. For instance, the qualification of fixed assets consist of certain types of fixed assets such as carpets, machinery and office equipment, However, in tax purposes, the qualifying of fixed assets is considered as plant and machinery. The expenditure on plant and machinery is any apparatus used in carrying business in the production of income. The apparatus on plant and machinery can be either live or dead, moveable or fixed. However, it must not a stock in trade of the business that acquired for sale purpose. In addition, it also cannot be the business premises or a part of the business premises. (IRAS, 2016; HM Revenue & Customs, 2005a)

a. Capital budgeting is the process of analyzing projects and determining which ones to accept and include in the capital budget.

The personnel budget, being the largest part of the operating budget, consists of multiple factors such as the average daily census, patient acuity, personnel required relating to full-time equivalents (FTEs), as well as productive and non-productive hours. The supplies include medical and office supplies, minor equipment, orientation and training, and travel expenses. Although budgets are based on assumptions, using the previous year’s expenses for personnel and supplies, helps the nurse manager/leader to accurately predict the next year’s budget.

There are different costs that respond to the different activities like variable costs are directly associated with the products sold. The cost behavior patterns of selling, general, administrative, and other operating expenses are determined, and these expenses are budgeted accordingly. For example, sales commissions will be a function of the forecast of either sales dollars or units. The historical pattern of some expenses will be affected by changes in strategy that management may plan for the budget period. In a participative budgeting system, the manager of each department or cost responsibility center will submit the anticipated cost of the department 's planned activities, along with descriptions of the activities and explanations of significant differences from past experience. After review by higher levels of management, and perhaps negotiation, a final budget will be established. Because of the necessity to recognize cost behavior patterns for planning and control purposes, overhead costs will be classified as variable or fixed.