Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Need help with yellow highlighted calculations. Step by step instructions will be helpful. PROBLEM 7-19 Dropping or Retaining a Segment LO 7-2 Jackson County Senior
Need help with yellow highlighted calculations. Step by step instructions will be helpful.
PROBLEM 7-19 Dropping or Retaining a Segment LO 7-2 Jackson County Senior Services is a nonprofit organization devoted to providing essential ser- vices to seniors who live in their own homes within the Jackson County area. Three services are prowi ided for seniors-home nursing. Meals On Wheels, and housekeeping. Data on revenue and xpenses for the past year follow House- Home Nursing Meals On Wheels Total keeping 490,000 20,000 140,000 210,000 190,000 60,000 80,000 410,000 Ftxed expenses: 40,000 7,000 38,000 80,000 165,000 20,000 15,000 37,000 48,000 120,000 8,000 20,000 40,000 52,000 405,000 20,000 68,000 42,000 115,000 180,000 Program adminlstrators' salarles General adminstrative overhead... Total fixed expenses Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concermed about the organization's finances and considers the net operating income of $5,000 last year to be razor-thin. Last year's results were very similar to the results for previous years and are represen tative of what would be expected in the future.) She feels that the organization should be buildingg its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more information about the financial advisability of perhaps discontinuing the house keeping program The depreciation in housekeeping is for a small van that is used to the housekeepers carry and their equipment from job to job. If the program we re 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. Requlred: 1. Should the Housekeeping program be discontinued? Explain. Show computations to support your answcr Recast the above data in a format that would be more useful to management in assessing t long-run financial viability of the various services. 2. he Requirement 1 Contribution margin lost if the Housekeeping program is dropped Fixed costs that can be avoided: Liability Insurance: Program Administrator's Salary Decrease in net operating income for the organization as a whole: Total without Housekeepin Please note there is a typographical error in the Problem 7-19 in the text... Under the Housekeeping column, the variable expenses reads $60,000 but should read $160,000 to get a Contribution Margin of $80,000 Difference Current Tota Revenues: Variable Expenses: Contribution margin Fixed Expenses: Please be sure to use the $160,000 figure in your Depreciation (calculation necessary): Liability Insurance: Program Administrators' salaries: General administrative overhead: Total Fixed Expenses: Net Operating Income (Loss) Should the housekeeping program be discontinued? Requirement 2. Home Meals on Housekeepi Nursing Wheels Total ng 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)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started