Second Question:
Jackson County Senior Services is a nonprofit organization devoted to providing essentlal services to seniors who IIve in their own homes within the Jackson County area. Three services are provided for senlors-home nursing. Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: "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 $45,100 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. The depreclation 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 avolded. Required: 1-a. What is the financlal advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Based on the financlal advantage (disadvantage) of discontinulng 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 vlability of the varlous services? What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? Prepare a properly formatted segmented income statement. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Polaskl Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given below. The Rets normally sell for $51 each. Flxed manufacturing overhead is $210,000 per year within the range of 21,000 through 30,000 Rets per year. Required: 1. Assume that due to a recession, Polaski Company expects to sell only 21,000 Rets through regular channels next year. A large retall chain has offered to purchase 9,000 Rets if Polaskl is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, varlable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a speclal machine to engrave the retall chain's name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retall chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.) 2. Refer to the orlginal data. Assume again that Polaski Company expects to sell only 21,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would reimburse Polaski for all of the varlable and fixed production costs assigned to the units by the company's absorption costing system, plus it would pay an additional fee of $1.60 per unit. Because the army would pick up the Rets with its own trucks, there would be no varlable selling expenses assoclated with this order. What is the financlal advantage (disadvantage) of accepting the U.S. Army's special order? 3. Assume the same situation as described in (2) above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 9,000 Rets. Given this new Information, what Is the financlal advantage (disadvantage) of accepting the U.S. Army's speclal order
