70.2K

Verified Solution

Link Copied!

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 Nursing Meals On House- keeping $ 929,000 268,000 $ 401,000 260,000 463,000 118,000 192,000 153,000 466,000 150,000 209,000 107,000 Total Wheels Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators3 salaries General administrative overhead* 20, 300 15,600 36,300 52,000 414,600 124,000 166,400 124,200 $ 51,400 $26,000 $ 42,600 (17,200) 69,800 43,500 115,500 185,800 8,700 20,700 41,000 53,600 40,800 7,200 38,200 80,200 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 $51,400 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 Nursing Meals On House- keeping $ 929,000 268,000 $ 401,000 260,000 463,000 118,000 192,000 153,000 466,000 150,000 209,000 107,000 Total Wheels Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators3 salaries General administrative overhead* 20, 300 15,600 36,300 52,000 414,600 124,000 166,400 124,200 $ 51,400 $26,000 $ 42,600 (17,200) 69,800 43,500 115,500 185,800 8,700 20,700 41,000 53,600 40,800 7,200 38,200 80,200 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 $51,400 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

Answer & Explanation Solved by verified expert

See Answer