2-a. Prepare a segmented income statement. Home Nursing Meals On Wheels House ke

Question

2-a. Prepare a segmented income statement. Home Nursing Meals On Wheels House keeping Totals 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) 2-b. Would a segmented income statement format be more useful to management in assessing the long- run financial viability of the various services. O Yes O No

Explanation / Answer

SOLUTION

2a.

2b. Yes, it would be more useful.

Particulars Home Nursing ($) Meals on wheels ($) House keeping ($) Totals ($) Revenues 263,000 408,000 250,000 921,000 Variable expenses 111,000 197,000 150,000 458,000 Contribution margin (a) 152,000 211,000 100,000 463,000 Traceable fixed expenses:   Depreciation 8,200 40,300 20,200 68,700   Liability insurance 20,100 7,600 15,500 43,200   Program administrators’ salaries 40,100 38,900 35,700 114,700 Total traceable fixed expenses (b) 68,400 86,800 71,400 226,600 Program segment margins (a) - (b) 83,600 124,200 28,600 236,400 General administrative overhead 184,200 Net operating income (loss) 52,200

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