Costs and Benefits of Health and Social Care Sector

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For a record, any decision made in large sectors require consideration of the costs required to complete its process of formulation and implementation. The core activities of management and supervision require proper analysis of the required funding. However, costs have varied importance. To identify costs, you need to consider their relevance; for instance, we have costs related to the following: future costs, opportunity cost, sunk costs, common costs and committed costs. Every management is mandated with ensuring that all activities and sectorial procedures are operational and not necessarily on expenses. However, many organizational compete for prioritization for instance quality, stocking, and productions. Management of the expenditure controls the outcomes of all others. Deep analysis of finance, cost of producing an item, quantifying undesirable outcomes and ensuring efficiency of work gives basic information about money management. Below is a detailed report.

Concepts, Features, Importance of Costs and Accounting for Health and Social Care

Some of the concepts are discussed here. First is the cost, which we can say is the amount of a resource exchanged for some others or resources. These resources here take the form of monetary terms. Cot is essentially the total money used for a certain service or goods. It is what is sacrificed to acquire something. For instance, the cost of an item includes its transport expenditure and the real price of the item. The cost is here studied with key attention directed at its purpose. Secondly is the expense which is understood as solely being the cost applied against the revenue concerning a specific period of accounting, that is, the sales of goods and the wage payments for the same period.

Thirdly is the loss. Means reduction of the equity of ownership but not the removal of the capital where in most cases no compensation is given in return (Finkler, 1999, p.78). For example, when the house is burnt to flames. The main concept is that one gives up on 0somehtibgn or undergoes over something to achieve something else. This kind of sacrifice guarantees no benefit in return. The next one is the cost center, which means some portion of responsibility whereby the costs are bumped up. It is more of a section. It is the section or department which serves as a reference where cost is obtained to calculate and determine the management of costs. For instance, a section may be under the supervision of one person but has different departments. This person is called a foreman. An example of a cost centre could be a salesperson or a delivery vehicle. The next is the profit centre. This means an activity section or department that is mandated with revenue and expenses. It communicates about the profits of a specific department. This centre is put up to manage people and show how they perform.

We also have a cost object and cost driver. For the former, it means an activity for which a desirable measure of costs occurs. For instance, if the accountants want to know about the cost of something, this is known as the cost object. Examples may include the cost of an item or a product like a car, the cost of printing, for instance, is also a cost object.  For the latter, it is anything that causes the cost to occur. Examples include the number of workers and the number of items sold. The next is the conversion cost which means the cost of turning something from one form to the next or the cost of paying workers and overall expenses. In simple terms, it means the cost of work less the cost of acquiring items for the same.

We also have a contribution margin. This means the amount realized out of the miscellaneous costs. Mathematically this is normally expressed in ratios or percentages about the sales. Carrying costs are referred to as standing costs. They are the types of costs which serve to control inventories and include the amount incurred for storing inventory and to some extent the spaces. Finally to summarize the list of the concepts for this paper is the training costs. This primarily means the cost that a company incurs to acquit its workers with relevant skills, the wages or salary pay and even to some extent offering them training.

The appended here below is a list of features of a good accounting system. The system should be established under the following characteristics that are universally accepted as fundamental. They include: The Cost Accounting system needs to be simple and easier to comprehend to cater to enterprise demands. Secondly, the method used for accounting should be good enough for the industrial requirements and serve its mandate.

Thirdly, the system is bound to the structure of the organization for which it is intended. It ought to consider a design that is a sub-system of the overall organization. All departments in the organization ought to be coordinating among themselves (Bragg, 2016, p.147). Fought, the costs in regard to the benefits should be in a position to justify the work produced. Next is that the system is expected to be effective and also efficient to take up every essential details and avoid the items not required.

Also, the system is bound to receive active communication, and cooperate and participate by the executives from each department. There should be an integrated and preferred relationship between the costing system and the financial accounts. Without these, duplication is very possible. A simple integral system of accounts is fine.

Finally, the system should consider the following all the important details are collected, brought together and are logical so to say. Again there’s to be that proper record which should be kept as regards to worker’s time and relevant salaries. The source of references for the salaries should be from the salary sheet or list. Some factors like real time, extra time (overtime), holiday payments should be properly organized and recorded. The system should also give an orderly list of ordering of materials, receipts, the stock, materials of materials from the stores should be recorded well to prove efficiency beyond doubt.

The importance of accounting and costing may vary considerably. For our case, we are going to consider the following list of importance. First is that it helps to organize costs and making decisions. In the current world of technology and the just expounded knowledge on accounting and software for running a small enterprise, the information relating to every aspect is readily available in every company's website for the activities they undertake. For decision making, not all of this data may be relevant anyway. Maybe you are required to have a look at any management decision and the relevant data that goes hand in hand with it. Secondly, it assists to identify the relevant costs. This is where we have to choose or eliminate the costs with their order of relevancy. For instance, costs fall under the following list: future costs, opportunity costs, sunk costs, committed costs and noncash expenses.

An example of costs that are classified may be discussed. An example is of the utmost importance to help us rule out some. For instance, a Skate Company was asked to make some huge box retail to offer some specific models of skate services in the stores they own. It rather decided of taking to action and make a victory on order by quoting 3000 units which are a price 10 percent higher than the normal costs. The following list relates to their project idea:

For the materials, the order rather needed specific wheel types that in one way or the other they had not in the stock. They agreed to order some more at the extra cost worth $ 40, 000. For the labour supply an added cost now more than $45, 000 was essential. The supervisor for the factory would take home to a tune of $5,000 at the time of producing by the factory. Not forgetting the wear and tear of the production equipment’s depreciation. Therefore it was clear that it would take the company’s $4,000 just during the production days. As well electricity is a thing not to forget to say a thing. During the order period, it would eat the company’s $7,000 in estimation. The manufacturing cost would not exceed $8,000 but at least to the mentioned amount. However, this would vary depending on the number of machines used during the production period and the hours in total they were operational. Though the costs for the company are not alone enough to make a decision. For instance, the cot to pay a supervisor is a committed one, which means that he/she will still be on the payroll regardless of the time in which the company is producing or not. For the case of a depreciation of the equipment, it may be assumed to be a noncash type of expense. Someone may say that the percentage quoted is not right for this project (Brigham and Ehrhardt, 2010). But anyway, they may be right. In this case, the expenses can be paid and still preserve something for the profit. I have given an example to put a procedure to identify some costs that are important in coming up with a decision.

To be capable of separating the relevant and the less relevant costs is a critique of the managers. It is more of  management skill that successful managers ought to use each time they sit to make decisions. However, it is always important to remember that decisions are made with consideration of their quality factors in the equation, and not necessarily the basic revenues and expenditure.

A Critical Analysis of the Financial Position of the Anchor Trust Group

Anchor started back in the year 2012. It has thrived to reach assets at group level within the scope of its able management and advice at 31/12/2016 of R45.9 billion, up to 35% which is a rise from R34.1 by the same period in the previous year. Anchor operates primarily in three divisions, that is private clients, stockbroking, and asset management.

A review of the financial position of Anchor Group Limited is based on the consolidated annual reports and statements. Anchor achieved its growth by the year 2016 both materially with a key emphasis on both the acquisition and organic growth. The turnover grew almost double its value in the previous year. Its cost base also widened considerably due to the growth of the variable costs as regards to the turnover, consolidating the costs of the young businesses, new acquisition and diversification of the staff throughout the state to assume future growth, the activities, and the costs of the system and by extension compliance to ensure experience by the client.

The share capital of Anchor Group were 22.8 million shares by the beginning of the year 2016. They were issued to the senior managerial staff and the former holders of various acquisitions that were done to put the interests in line with the idea to grow the company based on groups. In the accounting period, limited contracts were operational. The directorates had interested to join and this limited the operations of the organization. As well the interests in the associates are presented materially as an annual financial statement. The interests of the group about the profits and losses were almost fourteen times the previous year.

From the Memorandum of Incorporation the directors can exercise all the powers of the company, for instance, they can borrow money as they see appropriate. Regarding the solvency, therefore the powers of the directors to borrow are unlimited.

A Critical Analysis of the Budgetary Processes Used By Health Care Organizations

Most healthcare organizations like Anchor use medium-term budgets. The medium-term budget shows that the decisions based on expenditure often have a long time impact than can be assumed for one year and this must be reflected when creating budgets. Additionally, the medium-term budget in Australia produces a long-serving budget with a report generated. In contrast, the natural business can change with consideration to a particular business. For instance, many central government activities have a timeframe that is natural. It takes a course in more than one year. The beyond budgeting is an approach that is a revolutionist approach which contrasts the convention budgetary thinking. However, there are more comprehensive parts with some training could work with conventional organizations. These budgets are flexible as they can adopt changes shortly. The subsidiary of the main organizations contributes to the budgetary as they communicate on the grass root issues.

Financial Ratios Used By Anchor Trust

Regarding profitability, the Anchor Group is a not-for-profit and charitable organization. It is understood that they lack a shareholder who they can pay their dividends to, and therefore they own their organizations. This is understood that they can invest back to grow their organizations. Through their efforts, the services provided are good, and their customers are satisfied. Regarding liquidity, the Anchor Group are not likely to come to an end. With the growing human needs, they ought to come up with strategies that help to sustain their business. For instance, when they included their staff in decision making and shares, this meant that they wanted to widen their working base and spread their risks over. Their liquidity is not sooner.

Regarding efficiency, the Anchor group tends to be effective. They are committed entirely to deliver for instance responsible energy management, reduce the cost of energy for their customers and minimize their environmental impacts. For instance, they purchase 3000WH of gas and electricity each year and ensure the achievement of the people is great. Again, their procurement strategy allows them to purchase gas and electricity up to 3 years to come to meet meaning they can manage achievement medium prices on behalf of their customers who may be vulnerable for the same.

Proposal for Managerial Positions of an Organization

A proposal is at this moment given to a managerial decision for an organization to work based on the criteria below. First is to identify a problem. As the members, there’s need to come up with the idea to show that there is a decision to make. For instance, most decisions are made when there is a particular issue, a need or arising opportunity for the organization. Secondly, is to seek information. The leaders like supervisors mostly seek some data on some identified particular issue requiring some decision. The third is to brainstorm (Field and Brown, 2007). This involves making detailed ideas based on an issue where one has some inner understanding. This can take the form of after a few seconds or formal planning, with emphasis on particular decisions. 

Next is to choose an alternative where for instance the managers weigh the advantages and disadvantages of choosing one option over the other. For example, choosing to undertake a course of action with the least cost and more profits. Fifth is to implement the plan once it has been formulated. There may be limited time for potential guess if it may happen. Once the solution is laid down, all employees need to be put in place to immediately start the action. Lastly for this case, is to evaluate the outcomes. For instance, even the experienced business owners usually learn from the mistakes they have committed earlier on. Always monitor the results of strategic decisions you either make or intend to when you own a little business. Always get ready and adapt your plan as required, or change the cards in case the chosen one fails.

References

Bragg, S. M., 2016. Cost accounting fundamentals: essential concepts and examples.. 1st Ed. Ed. Colorado: Centennial.

Brigham, F. E. and Ehrhardt, C. M. (2010). Financial Management: Theory and Practice. South

Western: Mason.

Finkler, S. A. 1999. Cost accounting for healthcare organizations: concepts and applications. 2nd Ed. Ed. Gaithersburg, Md, Aspen Publishers

Field, R. and Brown, K. (2007). Managing with Plans and Budgets in Health and Social Care. SAGE Publications: London

August 18, 2023
Category:

Business Economics

Number of pages

10

Number of words

2637

Downloads:

58

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