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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: Home On House- Total Nursing Wheelskeeping 924,000 263,000 $ 410,000 251,000 466,000 110,000 197,000 458,000 153,000 213, 000 Revenues Variable expenses Contribution margin 159,000 92,000 Fixed expenses: Depreciation 9,000 20,500 40,100 52,600 412,600 122,200 169,200 70,100 43,500 114,200 184,800 40,900 7,800 38,500 82,000 20,200 15,200 35,600 50,200 121,200 Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses $45,400 30,800 43,800 (29,200) 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 $45,400 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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