Jackson County Senior Services is a nonprofit organization devoted to providing
ID: 2342221 • Letter: J
Question
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: Meals On House- Nursing Wheels keeping $ 923,000 $ 269,000 $ 401,000 253,000 472,000 116,000 201,000 155,000 98,800 Home Total Revenues Variable expenses Contribution margin 451,000 153,0068 200,00e Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 20,300 15,400 35,900 50,600 122, 208 $. 37,600 29,300 $ 32,500 $(24,200) 69,400 44,100 115,300 184,680 413.400 8, 300 21,008 40,600 53,800 123,708 40,800 7,700 38,800 80,200 167,500 Total fixed expenses Net operating income (loss) 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 $37600 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?Explanation / Answer
Determine the Financial disadvantage particulars amount net income before discountinuing house keeping 37600 net operating income after discontinuing house keeping 11200 incease in net operating income (financial advantage) 48800 particulars home nursing meals on wheel house keeping total Sales 269000 401000 0 670000 less: variable cost 116000 201000 0 317000 contribution margin 153000 200000 0 353000 depreciation 8300 40800 0 49100 laibility insurance 21000 7700 0 28700 program administrator's salaries 40600 38800 0 79400 general administrative overhead 53800 80200 50600 184600 net operating income( loss) 29300 32500 (50600) 11200 2) prepare a properly formatted segemented income statement as shown below Particulars home nursing meals on wheel house keeping total sales 269000 401000 253000 923000 less: variable costs 116000 201000 155000 472000 contribution margin 153000 200000 98000 451000 less: direct fixed cost depreciation 8300 40800 20300 69400 laibility insurance 21000 7700 15400 44100 program administrator's salaries 40600 38800 35900 115300 segment margin 83100 112700 26400 222200 less: general administrative overehead 184600 net operating income/loss 37600 therefore the net operating income (loss) for the total company is $ 37600
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.