Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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: Total $1,008,000 558,400 449,600 Home Nursing $291,200 136, 800 154,400 Meals on Wheels $448,000 240,000 208,000 House- keeping $268,800 181,600 87,200 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Operating income (loss) 72,560 46,440 122,800 201,600 443,400 6,200 8,960 21,800 43,000 58,240 132,000 $ 22,400 41,800 8,200 39,800 89,600 179,400 $ 28,600 21,800 16,440 40,000 53,760 132,000 $(44, 800) $ *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 $6,200 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. in net operating income by

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Warren Buffett Accounting Book Reading Financial Statements For Value Investing

Authors: Stig Brodersen, Preston Pysh

1st Edition

1939370159, 9781939370150

More Books

Students also viewed these Accounting questions

Question

What is the area of the figure below? 12 20

Answered: 1 week ago

Question

13.1 Explain the strategic role of employee benefits.

Answered: 1 week ago