Comprehensive Case #2 Comprehensive Case #2 Tizer Pharmaceuticals Tier Pharmaceuticals has an annual budget preparation and review pro cess that begins on November 1. At that time the finance department instructs all departments to prepare their budgets for the upcoming year, which would start on January 1. Normally units are expected to plan for modest growth in sales and production activity based on the growth in the economy in general and the province's health care budget in particular Hazel Coleman is Human Resource Manager at Tier Pharmaceuticals Sbo prepared the following budget: Tizer Pharmaceuticals Human Resources Department Budget for the Year Cost line Cost Driver Manager's salary Manager S 80.000 Employees salaries Human resource employees 2000 Total salaries 540 Salary related costs 15% of salaries 72.000 Travel & interview its intervices 100.000 Position hertising new positions 50.000 Office expenses Centrally located cost 10000 Miscellance Total $42.00 It is mid-December. Hazel has just received the following email from the finance department: Bad news, we are sorry to tell you. A strategic analysis of the market has indicated that we have an unexpected problem Changes in the North American Free Trade Agreement have resulted in greater competition being expected from our neigh- bours south of the border. Instead of our usual growth of between 29 and 5%, we are now anticipating a 105 shrinkage in our sales All departments will please submit revised budgets, bearing in mind the following An overall cut of 27 must be made to all budget totals. Plan to reduce your departmental head count by at least 10%. Emplos. cos should be let go on last-in, first-out bruses There will be no new hiring in any unit for the next 6 months As Hazel, how would you respond to the proposed budget cut! 303 Comprehensive Case #2 Comprehensive Case #2 Tizer Pharmaceuticals Tier Pharmaceuticals has an annual budget preparation and review pro cess that begins on November 1. At that time the finance department instructs all departments to prepare their budgets for the upcoming year, which would start on January 1. Normally units are expected to plan for modest growth in sales and production activity based on the growth in the economy in general and the province's health care budget in particular Hazel Coleman is Human Resource Manager at Tier Pharmaceuticals Sbo prepared the following budget: Tizer Pharmaceuticals Human Resources Department Budget for the Year Cost line Cost Driver Manager's salary Manager S 80.000 Employees salaries Human resource employees 2000 Total salaries 540 Salary related costs 15% of salaries 72.000 Travel & interview its intervices 100.000 Position hertising new positions 50.000 Office expenses Centrally located cost 10000 Miscellance Total $42.00 It is mid-December. Hazel has just received the following email from the finance department: Bad news, we are sorry to tell you. A strategic analysis of the market has indicated that we have an unexpected problem Changes in the North American Free Trade Agreement have resulted in greater competition being expected from our neigh- bours south of the border. Instead of our usual growth of between 29 and 5%, we are now anticipating a 105 shrinkage in our sales All departments will please submit revised budgets, bearing in mind the following An overall cut of 27 must be made to all budget totals. Plan to reduce your departmental head count by at least 10%. Emplos. cos should be let go on last-in, first-out bruses There will be no new hiring in any unit for the next 6 months As Hazel, how would you respond to the proposed budget cut! 303