Jackson County Senior Services is a nonprofit organization devoted to providing

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: Home Meals On House- Nursing Wheels keeping $ 921,000 $ 263,000 $ 408,000 $ 250,000 458,000 111,000 197,000150,000 Total Revenues Variable expenses Contribution margin Fixed expenses: 463,000 152,000 211,000 100,000 Depreciation Liability insurance Program administrators' salaries General administrative overhead184,200 68,700 43,200 114,700 8,200 20,100 40,100 52,600 40,300 7,600 38,900 20,200 15,500 35,700 81,600 50,000 Total fixed expenses 410,800 121,000168,400 121,400 Net operating income (loss) S 52,200 S 31,000 $ 42,600 $ (21,400) Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $52,200 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more information about the financial advisability of perhaps 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

Explanation / Answer

Current house income total keeping increase or Dropped (decrease) Revenues 921,000 671000 -250,000 Variable expenses 458,000 308000 150,000 Conribution margin 463,000 363000 -100,000 Fixed expenses: Depreciation 68,700 68,700 0 liability insurance 43,200 27700 15,500 program administrator's salaries 114,700 79000 35,700 General administrative overhead 184,200 184,200 0 total fixed expense 410,800 359,600 51,200 Net operating income(loss) 52,200 3,400 -48,800 1-b) No

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