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 House- Home On Total Nursing Wheels keeping $900,000 $260,000 $400,000 $ 240,000 490,000 120.000 210.000 160.000 410,000 140,000 190, 80,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators salaries General administrative overhead Total fixed expenses Net operating income (loss) 68,000 42,000 115,000 8,000 20,000 40,000 40,000 7,000 38,000 20,000 15,000 37,000 180,000 52,800 80,000 48,000 1405,000 120,000 165,000 120,000 $ 5,000 $ 20,$ 25,000 $(40,000) "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 $5,000 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 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? 16. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Reg 1A, should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement 2-6. Would a segmented income statement format be more useful to management in assessing the long run financial viability of the various services? Req 1A Req 1B Req 2A Req 28 Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping Revenues 900.000 490,000 410,000 260.000 120.000 140,000 400.000M240,000 210.000 160,000 190.000 180.000 20,000 15.000 37.000 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) 68,000 42.000 115,000 225,000 185,000 205,000 (20,000) 8,000 20,000 40,000 68,000 $72,000 40,000 7,000 38,000 85,000 R15 72,000 8,000
