Jackson County Senior Services is a nonprofit organization devoted to providing essential services 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 expenses for the past year follow: Meals On House- Total Home Nursing Revenues Wheels keeping $ 927,000 $ 262,000 $ 407,000 $ 250,000 Variable expenses 475,000 111,000 207,000 157,000 Contribution margin 452.000 151.000 200,000 101,000 Fixed expenses Depreciation 70,100 8,600 40,700 20,800 Liability insurance 43,300 20,500 7,400 15,400 Program administrators' salaries 114,500 40,200 38,300 36,000 General administrative overhead 185.400 52,400 01.400 51,600 Total fixed expenses 413,300 121,200 167,800 123,800 Net operating income (los) $ 38,700 $ 29, 300 $ 32,200 $ (22,800) "Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $38,700 to be unsatisfactory, therefore, she is considering the possibility of 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 program administrator would be avoided. Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Reg 1A, should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement 2-6. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? BB What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? ---- Total Home Nursing Meals On Wheels House- keeping 0 0 0 0 Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) 0 0 Olo olo 0 $ 0 $ 0 $ 0 0
