6 ABC 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: 01:23:10 Book Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) W *Allocated on the basis of program revenues. Total Home Nursing Meals On House- Wheels keeping $ 916,000 $ 265,000 $ 401,000 $ 250,000 465,000 117,000 190,000 158,000 451,000 148,000 211,000 92,000 69,700 8,100 40,600 21,000 43,600 20,100 7,800 15,700 114,800 40,200 38,100 36,500 183,200 53,000 80,200 50,000 411,300 121,400 166,700 123,200 $ 39,700 $ 26,600 $ 44,300 $(31,200) The head administrator of ABC Services, considers last year's net operating income of $39,700 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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. Req 1A Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? < Prex 16 of 23 Next >