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: Total $ 923,000 469,000 454,000 Home Nursing $ 268,000 113,000 155,000 Meals On Wheels $ 405,000 201,000 204,000 House-keeping $ 250,000 155,000 95,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 69,600 43,300 115,300 184,600 412.800 $ 41.200 8,600 20,300 40.700 53,600 123,200 $ 31,800 40,400 7,300 38,000 81,000 166,700 $ 37,300 20,600 15,700 36,600 50,000 122.900 $ 27,900) *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 $41,200 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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? Req 1A Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? T Financial advantage Financial (disadvantage) Req 1A Req 1B Req 2A Req 2B Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? Yes Ono Req 1A Req 1B Req 2A Req 2B Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping 0 0 0 0 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) 0 0 0 0 0 $ 0 0 0 0 Req 1A Reg 1B Reg 2A OOOOOOOOO Reg 2B Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes No
