Managerial Accounting
16th Edition
ISBN: 9781259995484
Author: Ray Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 12, Problem 19P
PROBLEM 12-19 Dropping or Retaining a Segment LO12-2
Jackson Country Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson Country 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 Variable expenses |
Total $900,000 490,000 |
Home Nursing $260,000 120,000 |
Meals On Wheels $400,000 210,000 |
House keeping $240,000 160,000 |
| Contribution margin | 410,000 | 140,000 | 190,000 | 80,000 |
| Fixed expenses: | ||||
| 68,000 | 8,000 | 40,000 | 20,000 | |
| Liability insurance | 42,000 | 20,000 | 7,000 | 15,000 |
| Program administrators’ salaries .... | 115,000 | 40,000 | 38,000 | 37,000 |
| General administrative |
180,000 | 52,000 | 80,000 | 48,000 |
| Total fixed expenses | 405,000 | 120,000 | 165,000 | 120,000 |
| Net operating income (loss) | $ 5,000 |
$ 20,000 | $ 25,000 | $ (40,000) |
*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 $5,000 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 carry7 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:
- What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued1 Explain.
- 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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Problem 9-24 (LO. 3)
Kristen, an independent management consultant, is based in Atlanta. During March and April of 2020, she is contracted by a national hardware chain to help implement revised human resource policies in Jackson (Mississippi) temporarily. During this period, Kristen flies to Jackson on Sunday night, spends the week at the district office, and returns home to Atlanta on Friday afternoon. The cost of returning home is $550, and the cost of spending the weekend in Jackson would have been $490.
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Chapter 12 Solutions
Managerial Accounting
Ch. 12.A - EXERCISE 12A-1 Absorption Costing Approach to...Ch. 12.A - EXERCISE 12A-2 Customer Latitude and Pricing...Ch. 12.A - Prob. 3ECh. 12.A - Prob. 4ECh. 12.A - Prob. 5ECh. 12.A - EXERCISE 12A-6 Value-Based Pricing; Absorption...Ch. 12.A - Prob. 7ECh. 12.A - Prob. 8PCh. 12.A - Prob. 9PCh. 12.A - Prob. 10P
Ch. 12.A - Prob. 11PCh. 12.A -
PROBLEM 12A-12 Absorption Costing Approach to...Ch. 12.A - PROBLEM 12A-13 Value-Based Pricing LO12-10 The...Ch. 12 - Prob. 1QCh. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - “Variable costs and differential costs mean the...Ch. 12 - 12-6 "All future costs are relevant in decision...Ch. 12 - Prentice Company is considering dropping one of...Ch. 12 - Prob. 8QCh. 12 - 12-9 What is the danger in allocating common fixed...Ch. 12 - 12-10 How does opportunity cost enter into a make...Ch. 12 - 12-11 Give at least four examples of possible...Ch. 12 - 12-12 How will relating product contribution...Ch. 12 - Define the following terms: joint products, joint...Ch. 12 - 12-14 From a decision-making point of view, should...Ch. 12 - What guideline should be used in determining...Ch. 12 - Prob. 16QCh. 12 - Prob. 1AECh. 12 - Prob. 2AECh. 12 - Cane Company manufactures two products called...Ch. 12 - (
Alpha Beta
$30
$...Ch. 12 - Prob. 3F15Ch. 12 - Prob. 4F15Ch. 12 - Prob. 5F15Ch. 12 - (
Alpha Beta
$30
$...Ch. 12 - Prob. 7F15Ch. 12 -
Cane Company manufactures two products called...Ch. 12 - Prob. 9F15Ch. 12 - (
Alpha Beta
$30
$...Ch. 12 - Prob. 11F15Ch. 12 - Prob. 12F15Ch. 12 - (
Alpha ...Ch. 12 - (
Alpha Beta
$30
$...Ch. 12 - (
Alpha Beta
$30
$...Ch. 12 -
EXERCISE 12-1 Identifying Relevant Costs...Ch. 12 -
EXERCISE 12-2 Dropping or Retaining a Segment...Ch. 12 -
EXERCISE 12-3 Make or Buy Decision LO12-3
Troy...Ch. 12 -
EXERCISE 12-4 Special Order Decision...Ch. 12 -
EXERCISE 12-5 Volume Trade-Off Decisions...Ch. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - (
$5.10
$3.80
$1.00
$4.20
$1.50
$2.40
)
EXERCISE...Ch. 12 - Prob. 10ECh. 12 - (
$3.60
10.00
2.40
9.00
$25.00
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EXERCISE 12-11...Ch. 12 - Prob. 12ECh. 12 - EXERCISE 12-13 Sell or Process Further Decision...Ch. 12 - en
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Ch. 12 - Prob. 15ECh. 12 - (
$150
31
20
29
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24
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EXERCISE...Ch. 12 - Prob. 17ECh. 12 - Prob. 18PCh. 12 - PROBLEM 12-19 Dropping or Retaining a Segment...Ch. 12 -
PROBLEM 12-20 Sell or Process Further Decision...Ch. 12 - Prob. 21PCh. 12 - PROBLEM 12-22 Special Order Decisions LO12-4...Ch. 12 -
PROBLEM 12-23 Make or Buy Decision LO12-3
Silven...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - CASE 12-29 Sell or Process Further Decision LO12-7...Ch. 12 -
CASE 12-30 Ethics and the Manager; Shut Dora or...Ch. 12 - CASE 12-31 Integrative Case: Relevant Costs;...Ch. 12 -
CASE 12-32 Make or Buy Decisions; Volume...Ch. 12 - Prob. 33C
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