2: MANAGERIAL ACCOUNTING Fairyland County Senior Services is a non-profit organization providing essential services to seniors who live in their own homes but need some assistance. Three services are provided: Home nursing, Meals on Wheels, and Housekeeping. The following table provides data on revenue and expenses (in thousands). Home Meals on Housekeeping Total Nursing Wheels Revenues 260 400 240 900 Less Variable Expenses 120 210 160 490 Contribution Margin 140 190 80 410 Less Fixed Expenses Depreciation 8 40 20 68 Liability Insurance 20 72 15 42 Program Administrator Salaries 40 38 37 115 General Admin Overhead 52 80 48 180 Total Fixed Expenses 120 165 120 405 Net Operating Income(Loss) 20 25 (40) Allocated on the basis of program revenues Wiked Which (the Executive Director) is concerned about the low operating income which is very similar to previous years and has asked you to analyze the data and advise her on the feasibility of discontinuing the housekeeping program. None of the General Administrative Overhead can be eliminated, but the liability insurance and the salary of the program administrator would be avoided. Depreciation is on a van used to carry the housekeepers and their equipment from job to job. If the program is discontinued, the van would be donated to a charitable organization. Should the housekeeping program be discontinued? Support your conclusion by recasting the above data in a format that would be more useful to management in assessing the financial viability of each of the services provided. Page 3 4 Q +