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please help. this is all one question Cumberland County Senior Services is a non-prot organization devoted to providing essential services to seniors who live in

please help. this is all one question

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Cumberland County Senior Services is a non-prot organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniorshome nursing, Meals on Wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow: Home Meals on House- Total Nursing Wheels keeping Revenues $1,030,000 $312,000 $430,000 $230,000 Variable expenses 604,000 140,000 260,000 196,000 Contribution margin 476,000 164,000 220,000 92,000 Fixed. expenses: Depreciation 75,500 9,600 43,000 23,000 Liability insurance 49,400 23,000 9,000 17,400 Program administrators' salaries 128,000 45,000 41,000 42,000 General administrative overhead" 216,000 62,400 96,000 57,600 Total fixed expenses 469,000 140,000 159,000 140,000 Operating income (loss) 3 7,000 $ 24,000 3 31,000 $ (48,000) *Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $7,000 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its nancial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ewa asked for more information about the nancial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category is for a small van that is used to carry the housekeepers and their equipment fromjob tojob. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. None of the general administrative overhead would be avoided ifthe housekeeping program were dropped, but the liability insurance and the salary ofthe program administrator would be avoided. Required: 1-a. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. ::| 1-b. Should the housekeeping program be discontinued? Yes O No 2. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes O No

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