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- keeping Nursing $ 918, е00 $ 263,е0ө $ 40ө, өөө $ 255,өөө 111,000 Total Wheels Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators’ salaries General administrative overhead* Total fixed expenses 462, еее 456,000 200,000 200,000 151,000 152,000 104, 000 70,500 44,000 114,900 183,600 413,000 21,000 15,500 35,600 51,000 123,100 $ 43,000 $ 29,700 $ 32,400 $(19,100) 8,700 20,500 40,500 52,600 122,300 40,800 8,000 38,800 80,000 167,600 Net operating income (loss) *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 $43,000 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
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- keeping Nursing $ 918, е00 $ 263,е0ө $ 40ө, өөө $ 255,өөө 111,000 Total Wheels Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators’ salaries General administrative overhead* Total fixed expenses 462, еее 456,000 200,000 200,000 151,000 152,000 104, 000 70,500 44,000 114,900 183,600 413,000 21,000 15,500 35,600 51,000 123,100 $ 43,000 $ 29,700 $ 32,400 $(19,100) 8,700 20,500 40,500 52,600 122,300 40,800 8,000 38,800 80,000 167,600 Net operating income (loss) *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 $43,000 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
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 71P
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Transcribed Image Text: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-
keeping
$ 918,000 $ 263,000 $ 400,000 $ 255,000
151,000
104, 000
Total
Nursing
Wheels
Revenues
Variable expenses
462,000
456,000
111,000
152,000
200,000
200,000
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators’ salaries
General administrative overhead*
70,500
44,000
114,900
183,600
413,000
8,700
20,500
40,500
52,600
122,300
40,800
8,000
38,800
80,000
167,600
21,000
15,500
35,600
51,000
123,100
Total fixed expenses
Net operating income (loss)
$ 43,000 $ 29,700 $ 32,400 $(19,100)
*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 $43,000 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.
Transcribed Image Text:What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?
Should the Housekeeping program be discontinued?
OYes
No
Prepare a properly formatted segmented income statement.
Meals On
Wheels
House-
Total
Home Nursing
keeping
Revenues
Variable expenses
Contribution margin
Traceable fixed expenses:
Depreciation
Liability insurance
Program administrators' salaries
Total traceable fixed expenses
Program segment margins
General administrative overhead
Net operating income (loss)
Would a segmented income statement format be more useful to management in assessing the long-run financial viability of
the various services?
Yes
ONO
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Step 1 What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?
VIEWStep 2 Should the Housekeeping program be discontinued?
VIEWStep 3 Prepare a properly formatted segmented income statement
VIEWStep 4 Would a segmented income statement format be more useful to management?
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