Question
Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their ow homes within the Jackson County
Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their ow 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. 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. Total Hone Meals On House- Nursing Wheels $ 929,000 $ 265,000 $ 407,000 470,000 118,000 196,000 459,000 keeping $257,000 156,000 147,000 211,000 101,000 69,900 8,300 40,700 20,900 43,900 21,000 7,400 15,500 115,900 40,900 38,400 36,600 185,800 53,000 81,400 51,400 415,500 123,200 167,900 124,400 $ 43,500 $ 23,800 $ 43,100 $(23,400) The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $43,500 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. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Prepare a properly formatted segmented income statement. 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) Total Home Nursing Meals On Wheels House keeping 0 0 0 + 0 0 0 0 $ 0 $ 0 $ 0
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