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: Total Home Nursing Meals On Wheels House- keeping Revenues $ 927,000 $ 267,000 $ 402,000 $ 258,000 Variable expenses 465,000 114,000 195,000 156,000 Contribution margin 462,000 153,000 207,000 102,000 Fixed expenses: Depreciation 68,800 8,100 40,400 20,300 Liability insurance 43,200 20,200 7,600 15,400 Program administrators’ salaries 115,400 40,900 38,100 36,400 General administrative overhead* 185,400 53,400 80,400 51,600 Total fixed expenses 412,800 122,600 166,500 123,700 Net operating income (loss) $ 49,200 $ 30,400 $ 40,500 $ (21,700) *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 $49,200 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?
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:
| Total | Home Nursing | Meals On Wheels | House- keeping |
|||||
| Revenues | $ | 927,000 | $ | 267,000 | $ | 402,000 | $ | 258,000 |
| Variable expenses | 465,000 | 114,000 | 195,000 | 156,000 | ||||
| Contribution margin | 462,000 | 153,000 | 207,000 | 102,000 | ||||
| Fixed expenses: | ||||||||
| 68,800 | 8,100 | 40,400 | 20,300 | |||||
| Liability insurance | 43,200 | 20,200 | 7,600 | 15,400 | ||||
| Program administrators’ salaries | 115,400 | 40,900 | 38,100 | 36,400 | ||||
| General administrative |
185,400 | 53,400 | 80,400 | 51,600 | ||||
| Total fixed expenses | 412,800 | 122,600 | 166,500 | 123,700 | ||||
| Net operating income (loss) | $ | 49,200 | $ | 30,400 | $ | 40,500 | $ | (21,700) |
*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 $49,200 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?
(I am getting the answer disadvantage of 70,900 but this is incorrect)
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