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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: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) Total $ 925,000 463,000 462,000 69,800 43,900 114,700 185,000 413,400 $ 48,600 Home Nursing $ 268,000 118,000 150,000 8,400 20,700 40,400 53,600 123,100 $ 26,900 Meals On Wheels $ 406,000 194,000 212,000 40,400 7,700 38,500 81,200 167,800 $ 44,200 House-keeping $ 251,000 151,000 100,000 21,000 15,500 35,800 50,200 122,500 $ (22,500) *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 $48,600 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 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 various services?

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: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) Total $ 925,000 463,000 462,000 69,800 43,900 114,700 185,000 413,400 $ 48,600 Home Nursing $ 268,000 118,000 150,000 8,400 20,700 40,400 53,600 123,100 $ 26,900 Meals On Wheels $ 406,000 194,000 212,000 40,400 7,700 38,500 81,200 167,800 $ 44,200 House-keeping $ 251,000 151,000 100,000 21,000 15,500 35,800 50,200 122,500 $ (22,500) *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 $48,600 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 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 various services?

FINANCIAL ACCOUNTING
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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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: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Total $ 925,000 463,000 462,000 69,800 43,900 Home Nursing $ 268,000 118,000 150,000 114,700 185,000 413,400 $ 48,600 8,400 20,700 40,400 53,600 123,100 $ 26,900 Meals On Wheels $ 406,000 194,000 212,000 40,400 7,700 38,500 81,200 167,800 $ 44,200 House-keeping $ 251,000 151,000 100,000 21,000 15,500 35,800 50, 200 122,500 $ (22,500) Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) *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 $48,600 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 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 various services?
Transcribed Image Text: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: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Total $ 925,000 463,000 462,000 69,800 43,900 Home Nursing $ 268,000 118,000 150,000 114,700 185,000 413,400 $ 48,600 8,400 20,700 40,400 53,600 123,100 $ 26,900 Meals On Wheels $ 406,000 194,000 212,000 40,400 7,700 38,500 81,200 167,800 $ 44,200 House-keeping $ 251,000 151,000 100,000 21,000 15,500 35,800 50, 200 122,500 $ (22,500) Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) *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 $48,600 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 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 various services?
Complete this question by entering your answers in the tabs below. Req 1A Req 1B Revenues Variable expenses Contribution margin Traceable fixed expenses: Req 2A Prepare a properly formatted segmented income statement. Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) Req 2B $ Total Home Nursing 925,000 $ 268,000 $ 463,000 118,000 462,000 150,000 Meals On Wheels 8,400 20,700 40,400 69,500 392,500 $ 150,000 $ 185,000 207,500 0 0 0 0 406,000 $ 194,000 212,000 40,400 7,700 38,500 86,600 125,400 $ House- keeping 251,000 151,000 100,000 21,000 15,500 35,800 72,300 27,700
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1A Req 1B Revenues Variable expenses Contribution margin Traceable fixed expenses: Req 2A Prepare a properly formatted segmented income statement. Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) Req 2B $ Total Home Nursing 925,000 $ 268,000 $ 463,000 118,000 462,000 150,000 Meals On Wheels 8,400 20,700 40,400 69,500 392,500 $ 150,000 $ 185,000 207,500 0 0 0 0 406,000 $ 194,000 212,000 40,400 7,700 38,500 86,600 125,400 $ House- keeping 251,000 151,000 100,000 21,000 15,500 35,800 72,300 27,700
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