Answer Happy

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- Total Nursing Wheels keeping Revenues $ 929,000 $ 269,080 $ 410,000 $ 250,000 Variable expenses 457,800 112,000 191,00 154,800 Contribution margin 472,000 157,000 219,000 96,000 Fixed expenses: Depreciation 70,200 8,700 40,700 20,800 Liability insurance 43, 100 20,380 7,400 15,400 Program administrators salaries 115,800 40,900 38, eee 36,900 General administrative overhead 185,800 53,880 82,080 50,000 Total fixed expenses 414,900 123,700 168, 100 123, 100 Net operating income (loss) $ 57,100 $ 33,300 $ 50,900 $ (27,100) "Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $57,100 to be unsatisfactory, therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping is for a small von that is used to carry the housekeepers and their equipment from Job to job. If the program were discontinued, the von 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. Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-6. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement 2-6. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?