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Case from journal
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Reference no. IECJ0512C-C
Simplified Chinese language
Authors: Gloria Vollmers
Published by: IMA - The Association of Accountants and Financial Professionals in Business
Published in: "IMA Educational Case Journal", 2012
Length: 6 pages
Data source: Generalised experience

Abstract

This is a Simplified Chinese version. DETERMINING THE FATE OF AN ACADEMIC DEPARTMENT: a case in university budgeting. The case involves an academic department with a chronic budget deficit. The upper administration wants to close the department or its bachelor's program, believing that such action would save money. The problem is the university’s budget system. It treats all academic departments as cost centers without understanding that the static cost budget bears no relationship to the real costs of departments and fails to consider that departments generate revenues that would disappear in their absence. Because base budgets were set years ago and never realigned with changing needs, this department consistently runs a deficit. The case requires an ability to sort out relevant information and to deal with uncertainty. It demands that the student recognize that calculated and printed 'results' are not sacred and that they may be wrong and misleading. It also illustrates the utter failure of budgets to plan and control when they are not established in a realistic manner.
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Abstract

This is a Simplified Chinese version. DETERMINING THE FATE OF AN ACADEMIC DEPARTMENT: a case in university budgeting. The case involves an academic department with a chronic budget deficit. The upper administration wants to close the department or its bachelor's program, believing that such action would save money. The problem is the university’s budget system. It treats all academic departments as cost centers without understanding that the static cost budget bears no relationship to the real costs of departments and fails to consider that departments generate revenues that would disappear in their absence. Because base budgets were set years ago and never realigned with changing needs, this department consistently runs a deficit. The case requires an ability to sort out relevant information and to deal with uncertainty. It demands that the student recognize that calculated and printed 'results' are not sacred and that they may be wrong and misleading. It also illustrates the utter failure of budgets to plan and control when they are not established in a realistic manner.

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