Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniors-home nursing, Meals on Wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Operating income (loss). Total $1,062,000 592, 600 469,400 $ 74,840 48,660 126,700 212,400 462,600 6,800 Home Nursing $306,800 145,200 161,600 9,440 22,700 44,500 61,360 138,000 $ 23,600 Meals on Wheels $472,000 255,000 217,000 42,700 8,800 40,700 94,400 186, 600 $ 30,400 House- keeping $283,200 192,400 90,800 22,700 17,160 41,500 56,640 138,000 $(47,200) *Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $6,800 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Question

44.

 Subject :- Accounting 

 

Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their
own homes within the Cumberland County area. Three services are provided for seniors-home nursing, Meals on Wheels, and
housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform
tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the
program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for
the past year follow:
Revenues
Variable expenses
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators' salaries
General administrative overhead*
Total fixed expenses
Operating income (loss)
Total
$1,062,000
592, 600
469,400
$
74,840
48, 660
126,700
212,400
462,600
Home
Nursing
$306,800
145,200
161,600
9,440
22,700
44,500
61,360
138,000
6,800 $ 23,600
Meals on
Wheels
$472,000
255,000
217,000
42,700
8,800
40,700
94,400
186, 600
$ 30,400
House-
keeping
$283,200
192,400
90,800
22,700
17,160
41,500
56,640
138,000
$(47,200)
*Allocated on the basis of program revenues.
The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and
considers the operating income of $6,800 last year to be razor-thin. (Last year's results were very similar to the results for previous
years and are representative of what would be expected in the future.) She feels that the organization should be building its financial
reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ewa asked for more
information about the financial advisability of discontinuing the housekeeping program.
The depreciation in the housekeeping category is for a small van that is used to carry the housekeepers and their equipment from job
to job. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero
salvage value. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the
liability insurance and the salary of the program administrator would be avoided.
Transcribed Image Text:Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniors-home nursing, Meals on Wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Operating income (loss) Total $1,062,000 592, 600 469,400 $ 74,840 48, 660 126,700 212,400 462,600 Home Nursing $306,800 145,200 161,600 9,440 22,700 44,500 61,360 138,000 6,800 $ 23,600 Meals on Wheels $472,000 255,000 217,000 42,700 8,800 40,700 94,400 186, 600 $ 30,400 House- keeping $283,200 192,400 90,800 22,700 17,160 41,500 56,640 138,000 $(47,200) *Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $6,800 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ewa asked for more information about the financial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.
Required:
1-a. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued.
in net operating income by
Transcribed Image Text:Required: 1-a. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. in net operating income by
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education