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Jackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homeshome nursing, Meals on Wheels, and housekeeping.
Jackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homeshome nursing, Meals on Wheels, and housekeeping. Revenue and expense data for the past year follow: Total Home Nursing Meals on Wheels Housekeeping Revenues $ 919,000 $ 265,000 $ 404,000 $ 250,000 Variable expenses 477,000 111,000 208,000 158,000 Contribution margin 442,000 154,000 196,000 92,000 Fixed expenses: Depreciation 70,300 9,000 40,600 20,700 Liability insurance 43,300 20,300 7,400 15,600 Program administrators' salaries 113,800 40,300 38,200 35,300 General administrative overhead* 183,800 53,000 80,800 50,000 Total fixed expenses 411,200 122,600 167,000 121,600 Net operating income (loss) $ 30,800 $ 31,400 $ 29,000 $ (29,600) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program. The depreciation in housekeeping is for a small van 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 was 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
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