Problem 11-19 Dropping or Retaining a Segment [LO11-2] Che 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 $919.000 265,000 $403,000 251,000 473,000 110,000 200,000 155,000 446,000 177,000 203,000 96,000 Revenues Variable expenses Contribution margin Fixed expenses Depreciation Liability insurance Program administrators' salaries General administrative overhead Total tixed expenses Het operating income (los) 70,300 8.400 40.900 21,000 43,000 20, 100 7.800 25, 100 115,900 10,300 S8,300 36,800 159,800 53,000 80, 600 50,200 423,000 221,800 168,200 123,200 $ 33,000 $25,200 $34.900 (27, 100) "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 $33,000 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 C. 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: 1a 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 IA Reg 16 Reg 2A Reg 28 What is the financial advantage (disadvantage of discontinuing the Housekeeping program? Reg 18 > 20. Tepare a properly Tollalled segmented income statement 2-b. Would a segmented income statement format be more useful to management in various services? ces Complete this question by entering your answers in the tabs below. Req 1A Req B Req 2A Req 2B Should the Housekeeping program be discontinued? OYes ONO Req 1A Req 1B Req 2A Req 28 Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House keeping Revenues Vanable 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) 2. Prepare a propery som maleu segmente come statement 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viabilit Various services? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 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? Yes ONO
