Jackson County Senior Services is a nonprofit organization devoted to providing
ID: 2600111 • 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 ear follow for the past Home Meals On House- keeping $ 918,000 S 264,000 $ 401,000 253,000 478,000 119,000 203,000 156,000 Total Nursing Wheels Revenues Variable expenses Contribution margin Fixed expenses 440,000 145,000 98,000 97,000 69,300 43,200 20,500 Depreciation Liability insurance Program administrators' salaries 115,300 40,700 38,100 36,500 General administrative overhead 183,600 52,800 80,200 50,600 9,00040,200 20,100 7,400 15,300 Total fixed expenses 411,400 123,000 165,900 122,500 Net operating income (loss) $ 28,600 S 22,000 S 32,100 $ (25,500) 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 $28,600 last year to be razor-thin. (Last year's results were very similar t 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 o the results fo r previous years and are representative of what would be The depreciation in housekeeping is for a small van that is used to carry 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 the housekeepers and their Required: 1-a. What is the impact on net operating income by discontinuing housekeeping program?Explanation / Answer
(1a) Impact on net Operating income by Discontinuing housekeeping Program Difference Net Operating Inocme Current Total Total if House keeping Droped Income increse or (Decrese) Revenue 918000 665000 918000-253000 -253000 variable expenses 478000 322000 478000-156000 156000 Contribution margin 440000 343000 Fixed Expenses depreciation 69300 49200 69300-20100 20100 Liability Insurance 43200 27900 43200-15300 15300 Program administrative Salaries 115300 78800 115300-36500 36500 General administrative Over head 183600 183600 0 TotalFixed Expenses 411400 339500 net Operating income 28600 3500 -25100 (1b) Should the house keeping program be Discountinued No, Because the net Operating will be dereced by $25100 if the house keeping Program Discountinued (2-a) Segmented income Statement Home Nursing meals on wheels Housekeeping Total Revenue 264000 401000 253000 918000 variable expenses 119000 203000 156000 478000 Contribution margin 145000 198000 97000 440000 Traceable Fixed Expenses depreciation 9000 40200 20100 69300 Liability Insurance 20500 7400 15300 43200 Program administrative Salaries 40700 38100 36500 115300 Total traceable Fixed expenses 70200 85700 71900 227800 Program Segmented margins 74800 112300 25100 212200 General administrative over head 183600 Net operating Income 28600 (2-b) would be the segmented income statement fromat to be more useful to the management in assessing the long run financial viability Yes, Segemented income statement is More use to the management.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.