Question
Revenues ABC Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson
Revenues ABC 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. Hone Heals On Total Nursing Wheels keeping $926,000 $263,000 $405,000 $250,000 474,000 119,000 202,000 153,000 452,000 144,000 203,000 105,000 68,400 8,100 40,100 20,200 43.200 20,700 7,100 15,400 113,800 40,000 38,700 35,100 185,200 52,600 1,000 51,600 410,600 121,400 166,900 122,300 $ 41,400 $ 22,600 $ 36,100 $(17,300) Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses. Net operating income (loss) "Allocated on the basis of program revenues. The head administrator of ABC Services, considers last year's net operating income of $41,400 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. 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 aaa =
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