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Cumberland County Senior Services is a noniprofit organization devoted to providing essential services to seniors who Ive in their own homes within the Cumberland County

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Cumberland County Senior Services is a noniprofit organization devoted to providing essential services to seniors who Ive 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 heaith and to perform tests ordered by their physicians. The Meals on Wheels progrars dellvers a hot meat once a day to each senior enralled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenut and expenses for the past year follow: "Allocated on the basis of program revenues. The head administrator of Cumbertand County Senior Services. Judith Ewa, h concerned about the organizations Anances and considers the operoting income of $6,900 last yoar to be raror thin. (Last years resutt were very samilar to the fesults for previous years and are representative of whot would be expected in the future, She feels that the organirabon should be building its finnncial reserves at a more rapid rate in order to prepare for the next ineviable recession. After seving the above report, Ewa arked for more information about the financial advisability of discontinuang the housckeeping program. The depreciation in the housekeeping category is for a small van that is used to cary the housekeepers and their equipment fiom job to jot. If the program were discontinued, the van would be donated to a charitabie organization Degreciation charges assume zero savage value: None of the general gdministrative everhead would be avoided if the housekeeping progyam were drosped, but the liablity insurance and the salary of the program odministrator would be avoided Required: 1-a. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. 1.b. Should the housekeeping program be discontinued? Yes No 2. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes No

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