The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $35,200 tobe unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If theprogram were discontinued, the van would be donated to a charitable organization. None of the general administrative overheadwould be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administratorwould be avoided.Required:1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?1-b. Should the Housekeeping program be discontinued?2-a. Prepare a properly formatted segmented income statement.2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of thevarious services?X Answer is not complete.Complete this question by entering your answers in the tabs below.Req 1AReq 1BReq 2AReq 2BWhat is the financial advantage (disadvantage) of discontinuing the Housekeeping program?Financial (disadvantage)$35,200 Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their ownhomes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping.Data on revenue and expenses for the past year follow:HomeMeals OnHouse-TotalNursingWheelskeeping$ 924,000 $ 267,000 $ 405,000 $ 252,000205,000200,000RevenuesVariable expenses477,000447,000157,00095,000115,000Contribution margin152,000Fixed expenses:DepreciationLiability insuranceProgram administrators' salariesGeneral administrative overhead*69,20042,500115,300184,8008,40020,20040,20053,40040,2007,20038,80020,60015,10036,30050,40081,000167,200Total fixed expenses411,800122,200122,400Net operating income (loss)$ 35,200 $ 29,800 $ 32,800 $ (27, 400)*Allocated on the basis of program revenues.

The segmented income statement is the one which offers the additional or extra detail through…

he depreciation in housekeeping 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. None of the general administrative overhead vould be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator vould be avoided. Required: -a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? -b. Should the Housekeeping program be discontinued? -a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the rarious services?

he depreciation in housekeeping 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. None of the general administrative overhead vould be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator vould be avoided. Required: -a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? -b. Should the Housekeeping program be discontinued? -a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the rarious services?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $33,800 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping 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. 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. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? 2-a. Prepare a properly…
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