Dropping or Retaining a Segment
Jackson Count Senior Services is a nonprofit organization devoted to providing essential services to seniors who lie in their own homes within the Jackson Count ea Three services e provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow.
The head administrator of Jackson County Senior Seniors, Judith Miyama, considers last sears net operating income of $5,000 to be unsatisfactory therefore, she is considering the possibility of discontinuing the housekeeping program.
The
Required:
1. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program Should the Housekeeping program be discontinued Explain.
2. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run financial viability of its various services.
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- 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…arrow_forwardJackson 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 $ 929,000 $ 266,000 $ 406,000 $ 257,000 Variable expenses 468,000 116,000 196,000 156,000 Contribution margin 461,000 150,000 210,000 101,000 Fixed expenses: Depreciation 69,400 8,400 40,900 20,100 Liability insurance 43,400 20,500 7,400 15,500 Program administrators’ salaries 115,900 40,500 38,600 36,800 General administrative overhead* 185,800 53,200 81,200 51,400 Total fixed expenses 414,500 122,600 168,100 123,800 Net operating income (loss) $ 46,500 $ 27,400 $ 41,900 $ (22,800) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s…arrow_forwardJackson 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 $ 919,000 $ 262,000 $ 402,000 $ 255,000 Variable expenses 471,000 112,000 205,000 154,000 Contribution margin 448,000 150,000 197,000 101,000 Fixed expenses: Depreciation 69,700 8,200 40,800 20,700 Liability insurance 43,100 20,100 7,400 15,600 Program administrators’ salaries 116,600 40,900 38,700 37,000 General administrative overhead* 183,800 52,400 80,400 51,000 Total fixed expenses 413,200 121,600 167,300 124,300 Net operating income (loss) $ 34,800 $ 28,400 $ 29,700 $ (23,300) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior…arrow_forward
- 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 $ 930,000 $ 267,000 $ 405,000 $ 258,000 Variable expenses 474,000 119,000 198,000 157,000 Contribution margin 456,000 148,000 207,000 101,000 Fixed expenses: Depreciation 69,100 8,300 40,600 20,200 Liability insurance 44,100 20,900 7,800 15,400 Program administrators’ salaries 114,600 40,200 38,400 36,000 General administrative overhead* 186,000 53,400 81,000 51,600 Total fixed expenses 413,800 122,800 167,800 123,200 Net operating income (loss) $ 42,200 $ 25,200 $ 39,200 $ (22,200) *Allocated on the basis of…arrow_forwardJackson 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 $ 923,000 $ 265,000 $ 405,000 $ 253,000 Variable expenses 470,000 111,000 202,000 157,000 Contribution margin 453,000 154,000 203,000 96,000 Fixed expenses: Depreciation 69,200 8,200 40,400 20,600 Liability insurance 43,800 20,300 7,600 15,900 Program administrators’ salaries 116,000 40,900 38,200 36,900 General administrative overhead* 184,600 53,000 81,000 50,600 Total fixed expenses 413,600 122,400 167,200 124,000 Net operating income (loss) $ 39,400 $ 31,600 $ 35,800 $ (28,000) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior…arrow_forwardJackson 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: Revenues Total $ 925,000 $263,000 475,000 116,000 450,000 147,000 Home Nursing Meals On Wheels House-keeping $ 403,000 $ 259,000 205,000 Variable expenses Contribution margin Fixed expenses: Depreciation 69,700 8,200 Liability insurance 43,400 20,500 Program administrators' salaries 115,400 40,400 General administrative overhead* 185,000 52,600 Total fixed expenses Net operating income (loss) 413,500 121,700 $ 36,500 $ 25,300 198,000 40,900 7,500 38,400 80,600 167,400 $ 30,600 154,000 105,000 20,600 15,400 36,600 51,800 124,400 $ (19,400) Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?arrow_forward
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