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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 seniorshome nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:
Total Home Nursing Meals On Wheels Housekeeping
Revenues $ $ $ $
Variable expenses
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators salaries
General administrative overhead
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 years net operating income of $ 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:
a What is the financial advantage disadvantage of discontinuing the Housekeeping program?
b Based on the financial advantage disadvantage of discontinuing the Housekeeping program calculated in requirement Req A should the Housekeeping program be discontinued?
a Prepare a properly formatted segmented income statement.
b Would a segmented income statement format be more useful to management in assessing the longrun financial viability of the various services?Problem Algo Dropping or Retaining a Segment LO
Jackson County Senlor 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 seniorshome
hursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:
Allocated on the basis of program revenues.
The head administrator of Jackson County Senlor Services, Judith Miyama, considers last year's net
pperating income of $ 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.
Requlred:
a What is the financial advantage disadvantage of discontinuing the Housekeeping program?
lb Based on the financial advantage disadvantage of discontinuing the Housekeeping program calculated
in requirement Req should the Housekeeping program be discontinued?
a Prepare a properly formatted segmented income statement.
b Would a segmented income statement format be more useful to management in assessing the longrun
inancial vlability of the varlous services?
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