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 Meals On House- Total Nursing Wheels keeping $ 925,000 $ 262,000 $ 404,000 $ 259,000 467,000 120,000 193,000 154,000 458,000 142,000 211,000 105,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 70,500 8,700 41,000 20,800 43,200 20,600 7,400 15,200 115,300 40,900 38,600 35,800 185,000 52,400 80,800 51,800 414,000 122,600 167,800 123,600 $ 44,000 $ 19,400 $ 43,200 $(18,600) *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 $44,000 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 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? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2A Reg 28 What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Req 1A Reg 13 Reg 2A Reg 28 Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping 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
