Home Meals On House- Total Nursing Wheels keeping Revenues $900,000 $260,000 $400,000 $240,000 Varlable expenses 490,000 120,000 210,000 160,000 Contribution margin 410,000 140,000 190,000 80,000 Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead 68,000 8,000 40,000 20,000 15,000 42,000 115,000 20,000 7,000 38,000 40,000 37,000 180,000 52,000 120,000 80,000 48,000 Total fixed expenses 165,000 405,000 $ 5,000 $ 20,000 $ 25,000 $ (40,000) 120,000 Net operating income (loss) "Allocated on the basis of program revenues.
Dropping or Retaining a Segment
Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes 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:
The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $5,000 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.
The
Required:
1. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued? Explain.
2. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run financial viability of its various services.
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