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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?

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?

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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The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $35,200 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?
Transcribed Image Text:The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $35,200 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?
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: Home Meals On House- keeping $ 924,000 $ 267,000 $ 405,000 $ 252,000 157,000 95,000 Total Nursing Wheels Revenues Variable expenses 477,000 447,000 115,000 152,000 205,000 200,000 Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 69,200 42,500 115,300 184,800 411,800 8,400 20,200 40,200 40,200 7,200 38,800 20,600 15,100 36,300 53,400 122,200 81,000 167,200 50,400 122,400 Total fixed expenses Net operating income (loss) $ 35,200 $ 29,800 $ 32,800 $ ( 27,400) *Allocated on the basis of program revenues.
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: Home Meals On House- keeping $ 924,000 $ 267,000 $ 405,000 $ 252,000 157,000 95,000 Total Nursing Wheels Revenues Variable expenses 477,000 447,000 115,000 152,000 205,000 200,000 Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 69,200 42,500 115,300 184,800 411,800 8,400 20,200 40,200 40,200 7,200 38,800 20,600 15,100 36,300 53,400 122,200 81,000 167,200 50,400 122,400 Total fixed expenses Net operating income (loss) $ 35,200 $ 29,800 $ 32,800 $ ( 27,400) *Allocated on the basis of program revenues.
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