Problem 12-19 Dropping or Retaining a Segment (L012-2] 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 nursing. Meals on Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Home Meals on House- Total Nuring Wheels keeping $925,000 $269,000 $405,000 9 251,000 464,000 110,000 190,000 156,000 461,000 159,000 207,000 95,000 Revenues Variable expenses Contribution margin Fixed expenses Depreciation Liability insurance Program administratora salaries General administrative overhead Total fixed expenses Not operating income loon) 69,800 8,300 40,900 20,600 44,400 21,000 7.900 15,500 114,400 40,100 38,500 35,800 105,000 53,800 81,000 50,200 413,600 123,200 168,300 122, 100 $ 47,400 35,800 $10,700 0127.100) 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 $47,400 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? 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 1A Reg 16 Reg 2A Reg 28 What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Rog 1A Roq 18 > Complete this question by entering your answers in the tabs below. Req 1A Req 18 Reg 2A Reg 28 Should the Housekeeping program be discontinued? Yes No Complete this question by entering your answers in the tabs below. Reg 1A Req 10 Reg 2A Reg 28 Prepare a properly formatted segmented income statement. Total Home Nursing Moals on Whoals House- keeping 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) Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Reg 28 Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes No
