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Problem 11-19 Dropping or Retaining a Segment [L011-2] Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live
Problem 11-19 Dropping or Retaining a Segment [L011-2] 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 rursing, Meals On Wheels, and housekeeping Data on revenue and expenses for the past year follow: ne Meals On Wheels House- Nursing $ 935,000 $267,000 $409,000 $259, 000 111,000 156,000 Total keeping Revenues Variable expenses Contribution margin Fixed expenses : Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses 475,000 460,000 208,000 201,000 156,000 103,000 68,900 43,200 115,400 187,000 414,500 8,200 20,300 40,600 53,400 122,500 $ 45,500 33,500 32, 600 $(20,600) 40,500 7,500 38,600 81,800 168,400 20,200 15,400 36,200 51,800 123,600 Net operating income (loss) 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 $45,500 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: 1-8. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. 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? Net operating income (loss) $ 45,500 $ 33,500 32,600 $(20,600) 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 $45,500 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-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. Req 2A Req 2B Req 1A Req 18 What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Req 18 Re 1A Net operating income (loss ) $ 45,500 $ 33,500 32,600 $(20,6000) 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 $45,500 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 th 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-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. Req 18 Req 2B Req 1A Req 2A Should the Housekeeping program be discontinued? OYes No 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. 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 various services? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Prepare a properly formatted segmented income statement. Meals On Wheels House- keeping Total Home Nursing 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) Req 1B > Req 2B 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-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 the various services? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? OYes ONo Req 2A
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