Elder Services is a not-for-profit organization that has three departments in three separate locations, in addition to the headquarters. The organization provides services for elderly clients who are still living at home. One department provides meals, one department provides cleaning services, and one department provides health care services. Elder Services relies on client fees and a small grant from the region to provide services. Following are the results from last year's operations: Departments Meals Cleaning Health Total Visits + 10,000+ 10,000 10,000 30,000 Revenues $50,000 $100,000 $150,000 $300,000 Variable cost (labour and supplies) 30,000 50,000 - 120,000 200,000 Fixed overhead costs 4,000 8,000 10,000 22,000 e Transportation -($4,000 fixed + $5,000 variable) 9,000 9,000 - ($10,000 fixed + $2,000 variable) 12,000 12,000 $5,000 variable* 5,000 5,000 Headquarter costs allocated -(based on revenues) 10,000 20,000 30,000 60,000 Total expenses 53,000 90,000 165,000 308,000 Surplus (deficit) $ (3,000) $ 10,000 $(15,000) $ (8,000) * Nurses use their own cars. In the past, the region provided small grants each year to cover losses for Elder Services. However, due to an economic downturn and decreased tax funds in the current year, the region will not be able to provide any support next year. In light of these changes, the managers of Elder Services are trying to decide how to balance the budget. REQUIRED INFORMATION ANALYSIS A. What is the contribution margin per visit for44 each department before headquarter cost allocations? B. Consider the each of the following situations (b, c and d) independently. a. To eliminate losses, the director of Elder Services would like to close the department that provides health services for clients. Assume that no alternative uses are planned for the health services building and no change would occur in headquarters costs. Estimate the surplus (deficit) if the health services department is closed. b. What would be the estimated total surplus (deficit) if cleaning services increase by 2.000 surplus (dericit) If the alth services department is closed. b. What would be the estimated total surplus (deficit) if cleaning services increase by 2,000 new clients/cleanings, assuming no changes in fixed costs? c. What would be the estimated total surplus (deficit) if Elder closes the meals division and that space is leased to another organization for $2,000 per month? + C. Which type of nonroutine operating decision does Elder Services need to make? What are the managers' decision options? D. Perform quantitative analyses to help decide whether one or more of the options listed below would be beneficial to the finances of Elder Services. 1. The director of Elder Services would like to close the department that provides health services for clients. Assume that no alternative uses are planned for the health services building and no change would occur in headquarters costs.- 2. Cleaning services increase by 2,000 clients/cleanings. Assuming no changes in fixed costs. 3. Elder closes the meals division and that space is leased to another organization for $2,000 per month. E. List uncertainties about Elder Services' ability to achieve the quantitative results for each option. List as many uncertainties as you can. F. List qualitative factors that the managers of Elder Services need to consider in making this decision. List as many factors as you can. G. As a consultant to Elder Services, how might you go about acquiring qualitative information? H. Suppose you decide to interview Elder Services employees to help gather qualitative information. Identify possible reasons that information you obtain from employees might be F. List qualitative factors that the managers of Elder Services need to consider in making this decision. List as many factors as you can. G. As a consultant to Elder Services, how might you go about acquiring qualitative information? H. Suppose you decide to interview Elder Services employees to help gather qualitative information. Identify possible reasons that information you obtain from employees might be biased. List as many reasons as you can. I. Describe possible trade-offs the managers of Elder Services might need to make in deciding what to do