September 2023 Business & Finance Assignment
Please respond to classmate discusion post; include paaragraph, a question and reference. You can provide an example in your respond:
Option 2 – Given your examination of costing systems and cost information so far in this course, how might you start including more cost-based financial information in your decision-making processes? Do you have the information you need today? If not, how would you get this information? What business activities do you currently do which could be done if you had better or more accurate cost systems?
In the legal field we almost all do the same activity just on different levels- attorney and paralegal and secretaries all work on cases we just handle different tasks to achieve the same goal… to win cases. so our product isn’t tangible like making a bookcase or selling a computer. our product is legal services-which entails giving legal advice, drafting documents, etc.. I would utilize standard costing, variance costing and process costing in my decision making process. For example I would look at each case and determine and estimate costs of how much we would spend up front to develop the case ( client/ witness interviews reviewing medical documents and police reports along with documents submitted by opposing counsel and judicial staff ) and weigh that with the estimate of our potential recovery (variances) These variance costs will determine the following 1) should we take the case 2) should we refer it to an outside firm or 3) If we are already involved with the case how much we have already spent and is it worth going forward to fruition or withdraw as counsel and cut our losses. I would use direct cost ( for us that would be labor- employees and the salaries we pay) as more complex cases may require overtime from support staff which could be a major drain on capital; so I would use internal timekeeping to determine how much the firm is spending on overtime and what cases is the overtime being used- If its for small cases then thats a red flag. Currently I do not have the financial data to complete this task, I would need each department to prepare monthly reports showing time expenditure from beginning to end in conjunction with the accounting department create a spreadsheet showing what we have spent v.s what we won at settlement/trial, how much the client walked away with and how much profit we actually made.
As a paralegal with these costing systems I could track my time expenditure on each case and review the time spent v.s the complexity of the case and determine a ratio which I could use to better allocate my time and resources.
Siciliano, Gene. Finance for Nonfinancial Managers Second editions McGraw Hill Education (2015)
Standard Costs and Variance Analysis, Harvard Business School 9-196-121 January 26, 1996