When actual supply costs exceed expected costs, what should the administrator do first?

When actual supply costs exceed expected costs, the first step an administrator should take is to review production schedules. This process helps identify whether there are inefficiencies or discrepancies in how resources are being used. By analyzing the schedules, the administrator can ascertain if there are any unnecessary expenditures or areas where the operation may be over-consuming supplies.

Understanding the production schedules allows the administrator to determine if the high supply costs stem from insufficient planning, over-ordering, or a mismatch between supply acquisition and actual usage. If adjustments can be made without adversely affecting service quality, this can lead to a more efficient operation and help bring costs back under control.

Addressing the issue through production schedules is often a foundational step; it provides insights that can inform whether further actions, like negotiating prices with suppliers or cutting expenses, are necessary. Consequently, this approach ensures that solutions to cost overruns are grounded in a clear understanding of the operational workflow.