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:
*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 $26,400 to be
unsatisfactory; therefore, she is considering the possibility of
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.
Required:
1-a. What is the financial advantage (disadvantage) of
discontinuing the Housekeeping program?
1-b. 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-b. Would a segmented income statement format be more useful to
management in assessing the long-run financial viability of the
various services?
- Jackson County Senior Services Is A Nonprofit Organization Devoted To Providing Essential Services To Seniors Who Live I 1 (260.77 KiB) Viewed 50 times