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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 year follow: for the pas Home Meals On House- keeping $ 925,000 $ 263,000 $ 410,000 252,000 480,000 113,000 209,000 158,000 Total Nursing Wheels Revenues Variable expenses Contribution margin 445,000 150,000 201,000 94,000 Fixed expenses: 70,100 Depreciation Liability insurance Program administrators' salaries 114,200 40,200 38,900 35,100 General administrative overhead 185,000 40,800 20,900 8,400 44,400 20,900 15,700 82,000 50,400 413,700 122,100 169,500 122,100 $ 31,300 S 27,900 S 31,500 $ (28,100) 7,800 52,600 Total fixed expenses 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 $31,300 last year to be razor-thin. (Last year's results were very 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 similar to the result s fo r previous years and are representative of what would be The depreciation in housekeeping is for a small van that is used to 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 carry the housekeepers and their Required: 1-a. What is the impact on net operating income by discontinuing housekeeping program? (Decreases should be indicated by a minus sign.)
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