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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 $ 924,000 $ 267,000 $ 405,000 $ 252,000 477,000 115,000 205,000 157,000 447,000 152,000 200,000 95,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 69,200 8,400 40,200 20,600 42,500 20,200 7,200 15,100 115,300 40,200 38,800 36,300 184,800 53,400 81,000 50,400 411,800 122,200 167,200 122,400 $ 35,200 $ 29,800 $ 32,800 $(27,400) *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 $35,200 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. 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 $ 924,000 $ 267,000 $ 405,000 $ 252,000 477,000 115,000 205,000 157,000 447,000 152,000 200,000 95,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 69,200 8,400 40,200 20,600 42,500 20,200 7,200 15,100 115,300 40,200 38,800 36,300 184,800 53,400 81,000 50,400 411,800 122,200 167,200 122,400 $ 35,200 $ 29,800 $ 32,800 $(27,400) *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 $35,200 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. 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 1B Reg 2A Req 2B Prepare a properly formatted segmented income statement. $ Home Nursing Meals On Total Wheels 924,000 $ 267,000 $ 405,000 477,000 115,000 205,000 447,000 152,000 200,000 House- keeping $ 252,000 157,000 95,000 69,200 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) 42,500 115,300 227,000 220,000 8,400 20,200 40,200 68,800 83,200 40,200 7,200 38,800 86,200 113,800 20,600 15,100 36,300 72,000 23,000 $ $ $ 220,000
