2 02:14:30 Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniors-home nursing. Meals on Wheels, and housekeeping in the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow. Skyped Revenues variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses Operating Income (loss) 'Allocated on the basis of program revenues. How Total $1,000,000 Nursing Meals on wheels House- keeping $312,000 $480,000 $288,000 604,000 476,000 148,000 260,000 196,000 164,000 220,000 92,000 75,600 9,600 43,000 ,000 49,400 23,000 9,000 17,400 128,000 45,000 41,000 42,000 216,000 62,400 96,000 57,600 469,000 $ 7,000 $140,000 $ 24,000 189,000 140,000 $31,000 $(48,000) The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $7,000 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ewa asked for more information about the financial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category 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. Depreciation charges assume zero salvage value. 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. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. townting noome by reserves at a more rapid rate in order to prepare for the next iner tobie recession, Anter information about the financial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category 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. Depreciation charges assume zero salvage value. 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. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. n het operating income by 1-b. Should the housekeeping program be discontinued? O Yes O NO 2. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? O Yes O No Prou 3 of 39 Maxt