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: Ноme Meals On House- keeping $ 928,000 $ 265,000 $ 407,000 $ 256,000 159,000 97,000 Total Nursing Wheels Revenues 468, 0০০ 460, 000 Variable expenses 115,000 194, 000 213,000 Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries 150,000 69,000 43, 200 115,400 185,600 413,200 8,100 20, 200 40,400 53,000 121,700 40,500 7,600 38,700 81,400 168, 200 20,400 15,400 36,300 51, 200 General administrative overhead* Total fixed expenses 123,300 $ 46,800 $ 28,300 $ 44,800 $(26,300) 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 $46,800 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. 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.
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: Ноme Meals On House- keeping $ 928,000 $ 265,000 $ 407,000 $ 256,000 159,000 97,000 Total Nursing Wheels Revenues 468, 0০০ 460, 000 Variable expenses 115,000 194, 000 213,000 Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries 150,000 69,000 43, 200 115,400 185,600 413,200 8,100 20, 200 40,400 53,000 121,700 40,500 7,600 38,700 81,400 168, 200 20,400 15,400 36,300 51, 200 General administrative overhead* Total fixed expenses 123,300 $ 46,800 $ 28,300 $ 44,800 $(26,300) 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 $46,800 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. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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