Problem 13-19 (Algo) Dropping or Retaining a Segment [LO13-2] 8 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: 0.6 points Skipped Total $ 922,000 467,000 455,000 Home Nursing $ 266,000 117,000 149,000 Meals On Wheels $ 404,000 196,000 208,000 House- keeping $ 252,000 154,000 98,000 eBook Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) References 70,400 42,900 116,300 184,400 414,000 $ 41,000 9,000 20,500 41,000 53,200 123,700 $ 25,300 40,500 7,200 38,600 80,800 167,100 $ 40,900 20,900 15, 200 36,700 50,400 123,200 $ (25,200) *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 $41,000 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 would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided. 00 Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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? 0.6 points Skipped Complete this question by entering your answers in the tabs below. eBook Reg 1A Reg 1B Req 2A Req 2B References What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Req 1A Req 1B > would be avoided. 00 Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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? 0.6 points Skipped Complete this question by entering your answers in the tabs below. eBook References Req 1A Req 1B Reg 2A Reg 2B Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? Yes No Complete this question by entering your answers in the tabs below. 8 Req 1A Req 1B Req 2A Req 2B 0.6 points Prepare a properly formatted segmented income statement. Skipped Total Home Nursing Meals On Wheels House- keeping eBook 0 0 0 0 References 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) 0 0 0 0 0 0 $ 0 $ 0 0 would be avoided. 8 Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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? 0.6 points Skipped Complete this question by entering your answers in the tabs below. eBook References Reg 1A Req 1B Req 2A Reg 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
