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 $ 930,000 $268,000 $ 407,000 $ 255,000 476,000 118,000 205,000 153,000 454,000 150,000 202,000 102,000 Revenues Variable expenses Contribution margin Fixed expenses! Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses Net operating Incone (loss) 70,600 8,900 40,900 20,800 44,100 20,800 7,600 15,700 114,100 40,600 38,200 35,400 186,000 53,600 81,400 51,000 414,800 123,900 168,000 122,900 $ 39,200 $ 26,100 $ 34,000 $(20,900) "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 $39,200 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. Should the Housekeeping program be discontinued? 2-0. 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? Reg 1A Req 1B Reg 2A Reg 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Reg 1A Reg 1B Req 2A Reg 2B Should the Housekeeping program be discontinued? Yes NO Reg 1A Reg 1B Reg 2A Reg 2B Prepare a properly formatted segmented income statement. Meals On Wheels Home Nursing House- keeping Total 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) Re 1A Reg 1B Reg 2A Reg 28 Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes ONO
