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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 Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniorshome 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: Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $ last year to be razorthin. 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 liability insurance and the salary of the program administrator would be avoided. Required: a Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. in net operating income by b Should the housekeeping program be discontinued? Yes No Would a segmented income statement format be more useful to management in assessing the longrun financial viability of the various services? Cumberland County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniorshome 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: Total Home Nursing Meals on Wheels House keeping 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. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organizations finances and considers the operating income of $ last year to be razorthin. Last years 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: a Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. b Should the housekeeping program be discontinued? multiple choice Yes No Would a segmented income statement format be more useful to management in assessing the longrun financial viability of the various services? multiple choice Yes No
Cumberland County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their
own homes within the Cumberland County area. Three services are provided for seniorshome 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:
Allocated on the basis of program revenues.
The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and
considers the operating income of $ last year to be razorthin. 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 liability insurance and the salary of the program administrator would be avoided.
Required:
a Compute the change in net operating income for the company as a whole if housekeeping program be discontinued.
in net operating income by
b Should the housekeeping program be discontinued?
Yes
No
Would a segmented income statement format be more useful to management in assessing the longrun financial viability of the
various services? Cumberland County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniorshome 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:
Total Home
Nursing Meals on
Wheels House
keeping
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.
The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organizations finances and considers the operating income of $ last year to be razorthin. Last years 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:
a Compute the change in net operating income for the company as a whole if housekeeping program be discontinued.
b Should the housekeeping program be discontinued?
multiple choice
Yes
No
Would a segmented income statement format be more useful to management in assessing the longrun financial viability of the various services?
multiple choice
Yes
No
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