Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their ow homes within the Jackson County area. Three services are provided for seniors-home nursing, Meals On Wheels, and housekee Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Total Home Nursing $ 269,000 114,000 155,000 $ 926,000 468,000 458,000 69,900 43,200 115,100 185,200 413,400 $ 44,600 9,000 20,400 40,700 53,800 123,900 $ 31,100 Meals On Wheels $ 400,000 201,000 199,000 House- keeping $ 257,000 153,000 104,000 40,800 7,600 38,400 80,000 166,800 $ 32,200 $ (18,700) 20,100 15,200 36,000 51,400 122,700 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 $44,600 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?

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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Problem 11-19 (Algo) Dropping or Retaining a Segment [LO11-2]
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:
aw
Q
A
in
Revenues
Variable expenses
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators'
salaries
General administrative overhead*
Total fixed expenses
Net operating income (loss)
N
2
W
*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 $44,600 to
be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.
S
F2
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.
X
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?
#3
E
ㅁㅁ
F3
D
$
4
C
DOO
TOO
R
00
F4
F
LO
%
от до
Total Home Nursing
$ 926,000
468,000
458,000
5
V
69,900
43,200
115,100
185,200
413,400
$ 44,600
< Prev
F5
Meals On
Wheels
$ 269,000 $ 400,000
114,000
201,000
155,000
199,000
T
G
9,000
20,400
40,700
53,800
123,900
$ 31,100
B
5 of 6
MacBook Pro
F6
Y
&
7
40,800
20,100
7,600
15,200
38,400
36,000
80,000
51,400
166,800
122,700
$ 32,200 $ (18,700)
H
F7
Next >
U
N
* 00
House-
keeping
$ 257,000
153,000
104,000
8
J
>
DII
F8
M
9
DD
F9
K
O
0
*
F10
P
L
F11
T
+
{
P
Transcribed Image Text:Problem 11-19 (Algo) Dropping or Retaining a Segment [LO11-2] 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: aw Q A in Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) N 2 W *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 $44,600 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. S F2 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. X 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? #3 E ㅁㅁ F3 D $ 4 C DOO TOO R 00 F4 F LO % от до Total Home Nursing $ 926,000 468,000 458,000 5 V 69,900 43,200 115,100 185,200 413,400 $ 44,600 < Prev F5 Meals On Wheels $ 269,000 $ 400,000 114,000 201,000 155,000 199,000 T G 9,000 20,400 40,700 53,800 123,900 $ 31,100 B 5 of 6 MacBook Pro F6 Y & 7 40,800 20,100 7,600 15,200 38,400 36,000 80,000 51,400 166,800 122,700 $ 32,200 $ (18,700) H F7 Next > U N * 00 House- keeping $ 257,000 153,000 104,000 8 J > DII F8 M 9 DD F9 K O 0 * F10 P L F11 T + { P
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