Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It is late on a January Friday night and President Ron Becks just decided to adjourn the first staff meeting of 2016 at VMD Medical

image text in transcribed
It is late on a January Friday night and President Ron Becks just decided to adjourn the first staff meeting of 2016 at VMD Medical Imaging Center. The morale of the senior management team could certainly use a boost. Despite having recorded a prot in 2015, the discussion about the forecast for the upcoming year had become increasingly tense. Christine Widemeier, VP of Sales, had expressed serious concerns about the trend of the demand for VMD's services. If they wanted to maintain their usual margins, sales prices needed to be increased in 2016 and that was going to hurt. Their major client had already threatened to find an alternative provider, and there was a long line of low-cost competitors ready to jump in. Widemeier's team had made every possible effort to sustain their client's satisfaction, but she wasn't sure that the quality of the relationship would be enough to retain them going forward if prices were to be increased again this year. Something needed to be done to contain costs in production, and quickly. Mike Iankoski, Director of Operations, reacted quite defensively to Widemeier' s statement. In his opinion, their processes were as lean as they could be, their technology was better than it had ever been to date, and during the past year his team had achieved many significant efficiency improvements. He did not feel that the root cause of the increased costs were to be searched in operations. Jankoski's view was that his department had been charged with so many costs that were not under his control, and he questioned the appropriateness of the allocations built in the costing system. CFO Laura Gleason did not appreciate Iankoski's reaction and ensured the team that costs were accounted for appropriately. Gleason, instead, pointed to a recent purchase of a new, expensive, state-of-the-art 3D MRI machine, which had been justified as a source of competitive advantage. Due to its current low utilization, she wasn't sure it had been a wise investment, since it had insofar failed to generate sufficient returns to cover the expenses. Before the conversation could get out of hand, Becks decided to send everybody home and suggested to regroup first thing on Monday, hoping that the weekend would restore the collaborative spirit that he was used to seeing in his management team. Medical Imaging Services VMD Medical Imaging Center (V MD MIC) operates as a local, independent medical imaging center. The Center offers a wide array of medical imaging applications for the needs of its clients, including projectional radiographs (commonly known as xmys), uoroscopies, computerized axial tomographs (CAT), and magnetic resonance imaging (MRI) scans. These various forms of medical imaging tests differ widely in function and cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting General Journal

Authors: Claudia Gilbertson

11th Edition

1337623121, 9781337623124

More Books

Students also viewed these Accounting questions