Jackson County Senior Services is a nonprofit organization devoted to providing
ID: 2777103 • 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. seniors on a regular basis to check on their general health and to perform tests ordered by their physicians The Meals On Wheel housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow In the home nursing program, nurses visit Is program delivers a hot meal once a day to each senior enrolled in the program. The Home Meals On House keeping $ 919,000 $ 263,000 $404,000 $ 252,000 476,000 118,000 207,000 151,000 Total Nursing Wheels Revenues Variable expenses Contribution margin 443,000 145,000 197,000 101,000 Fixed expenses: Depreciation Liability insurance Program administrators' salaries 40,600 7,300 38,900 80,800 69,700 20,500 8,600 43,600 20,400 115,100 40,400 15,900 35,800 General administrative overhead* 50,400 412,200 122,000 167,600 122,600 S 30,800 S 23,000 S 29,400 $ (21,600) 183,800 52,600 Total fixed expenses Net operating income (loss) 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 $30,800 last year to be too small. (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 discontinuing the housekeeping program. 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. Depreciation charges assume zero salvage value. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the the housekeepers and their program administrator would be avoidedExplanation / Answer
1.a)
1.b) No
2.a)
2.b) Yes
Total if House Difference Current Total Keeping is dropped Net operating income increase / decrease Revenue 919000 667000 (252000) Variable Expenses 476000 325000 (151000) Contribution Margin 443000 342000 (101000) Fixed Expenses : Depreciation 69700 49200 (20500) Liability Insurance 43600 27700 (15900) Program Administrator Salary 115100 79300 (35800) General Administrative Overhead 183800 183800 0 Total Fixed Expenses: 412200 340000 (72200) Net Operating Profit / Loss 30800 2000Related Questions
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