Housekeeping variable expenses is WRONG, it is 160,000 INSTEAD of 60,000. Answers will be put in Excel.

only two-thirds of their present to the price quoted by the outside manufacturer Jackson County Senior Services is a nonprofit organization devoted to providing essential ser- vices 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 PROBLEM 7-19 Dropping or Retaining a Segment [LO 7-2 expenses for the past year follow: Meals On House- Home Wheels keeping Nursing Total $260,000 120,000 140,000 $400,000 $240,000 60,000 80,000 $900,000 210,000 190,000 Revenues... 490,000 Variable expenses Contribution margin. Fixed expenses: Depreciation Liability insurance. Program administrators' salaries General administrative overhead. 410,000 40,000 8,000 20,000 15,000 68,000 42,000 7,000 20,000 40,000 38,000 37,000 115,000 180,000 80,000 48,000 52,000 165,000 120,000 120,000 405,000 Total fixed expenses $ 20,000 25,000 $ (40,000) $ 5,000 Net operating income (loss) Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $5,000 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are represen- tative 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, Ms. Miyama asked for more information about the financial advisability of perhaps 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 progi administrator would be avoided. Required 1. Should the Housekeeping program be discontinued? Explain. Show computations to support your answer. 2. Recast the above data in a format that would be more useful to management in assessing the long-run financial viability of the various services. PROBLEM 7-20 Sell or Prncesc Eurt