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The Inglis University Library Donations Department Essay

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The Inglis University Library Donations Department Part 1 (Memorandum to the Chair of the Budget Committee) Date: To: From: Subject: March 23, 2012 Chair of the Budget Committee Yunzheng Zhao, Management Accountant Donations Department’s Request for Additional Funding

After reviewing the budget committee’s analysis, I believe that it made an inappropriate decision in denying the donations department’s request for additional funds. I will examine its decision through a cost-benefit analysis which shows that it may have overestimated the costs of maintenance, and overlooked the benefits of this important department. The budget committee overestimated the unit cost due to missing revenue, improper cost structure, and …show more content…

Furthermore, some of the expensive (or even priceless) items collected by the donations department have saved some of the expenditures that would have been taken out of the library’s budget. Hence, it is hard to say whether eliminating this department can indeed decrease spending; the expenditures made on future purchases of precious items can in fact offset any potential savings from eliminating the donations department. This analysis also suggests that the donations department is worthwhile to maintain. After conducting the cost-benefit analysis above, I conclude that the donations department deserves more funds and attention, as it significantly supports the library as well as the university as a whole. More funds would allow the department to hire more employees, which would lead to a decrease in the unit cost per donated book, and an increase in the capacity of processed books. Clearly, the benefits outweigh the costs of maintaining and expanding this department. Therefore, I suggest that the Budget Committee reconsiders its decision and allocate additional funds to the donations department.

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Part 2 (Cost Schedule of the Donations Department and Calculations) Since both fixed costs and variable costs are applied to the donated books, I recommend using a contribution approach while

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