Jackson County Senior Services is a nonprofit organization devoted to praviding
ID: 2436717 • Letter: J
Question
Jackson County Senior Services is a nonprofit organization devoted to praviding essential sarvices to seniors who live in their own homes within the Jackson County area Three services are provided for seniorshome nursing. Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow Home Meas On House TotalNursing Whools keeping 900,000 $ 260,000$400 000 $240,C00 490 000120,000 210 000 160,000 Variable expenses 10.000140,000 190.000 80,000 Fixed cxpenses Dopreciabon Liablity insurance 68,0008000 0,00020.000 2,00020,000 7,000 15,000 Program administrators salaries 115,000 40,000 38.000 37.000 General adminis?atrve overhead. 180,000 52000 80000 48000 Total foced expenses 05,000 120.000 165,000 120,000 Net operating income (loss) S 5.000 5 20.000 5 25,000$ (40,000) Allocated on the basis of program revenues The head administrator at Jackson County Senior Services, Judith Myama, is concerned about the organzation's inances and considees the net operating income of S5,000 last year to be razor-thin (Last year's results were very simslar to the results for previous years and are representatve of what would be expected in the future) She teels that the organzation should be buildng its financial reserves at a more rapid rate in oeder to prepare for the next inevtable recession Ater seeing the above report, Ms. Miyama asked for more information about the financial advisabiity of perhaps discontinang the housekeeping he depreciation in housekeeping is for a small van that is used to carry the housekeepors and ther squipment from job to job. If the program were discontinued, the van would be donated to a chantable organzation None of the general admeistrative overhead would be avoided if the housekoeping program were dropped, but the liablity iurance and the salary of the program adeinistrator would be avoded Required: 1-a whal is the impact on net pataang ncome by discorénung housekocpng program?Explanation / Answer
1-a.
Note: Depreciation on the van is a sunk cost and remaining cost of vans will have to be written off when the vans are donated.
1-b. No.
The Housekeeping program should not be discontinued since it would result in a decrease in net operating income of $28000.
2-a.
2-b. Yes
Current Total Total if Difference: Net Operating Housekeeping is dropped Income Increase or (Decrease) Revenues 900000 660000 -240000 Variable expenses 490000 330000 160000 Contribution margin 410000 330000 -80000 Fixed expenses: Depreciation 68000 68000 0 Liability insurance 42000 27000 15000 Program administrators' salaries 115000 78000 37000 General administrative overhead 180000 180000 0 Total fixed expenses 405000 353000 52000 Net operating income (loss) 5000 -23000 -28000Related Questions
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