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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
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- Nursing Wheels keeping 925,000 264,000 407,000 254,000 151,000 103,000 Home Total Revenues Variable expenses 459,000 118,000 190,000 146,000 217,000 Contribution margin 466,000 Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 20,800 15,100 36,500 50,800 123, 200 $ 51,700 22,700 49,200 (20,200) 69,600 43,500 116,200 185,000 414,300 8,700 20,800 41,000 52,800 123,300 40,100 7,600 38,700 81,400 167,800 Total fixed expenses Net operating income (loss) 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 $51,700 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. Should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services
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