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: Revenues Variable expenses. Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead. Total fixed expenses Net operating income (loss). Home Nursing Total $ 920,000 $264,000 484,000 436,000 117,000 147,000 8,200 20,500 40,300 Meals On Wheels $ 402,000 210,000 192,000 40,200 7,400 38,600 80,400 68,900 43,000 114,300 52,800 184,000 410,200 121,800 166,600 $ 25,800 $ 25,200 $ 25,400 House- keeping $ 254,000 157,000 97,000 20,500 15,100 35,400 50,800 121,800 $ (24,800) "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 $25,800 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?
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: Revenues Variable expenses. Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead. Total fixed expenses Net operating income (loss). Home Nursing Total $ 920,000 $264,000 484,000 436,000 117,000 147,000 8,200 20,500 40,300 Meals On Wheels $ 402,000 210,000 192,000 40,200 7,400 38,600 80,400 68,900 43,000 114,300 52,800 184,000 410,200 121,800 166,600 $ 25,800 $ 25,200 $ 25,400 House- keeping $ 254,000 157,000 97,000 20,500 15,100 35,400 50,800 121,800 $ (24,800) "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 $25,800 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
Revenues
Variable expenses.
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators' salaries
General administrative overhead.
Total fixed expenses
Net operating income (loss).
Home
Nursing
Total
$ 920,000 $264,000
484,000
436,000
117,000
147,000
Meals On
Wheels
$ 402,000
210,000
192,000
40,200
7,400
38,600
80,400
166,600
House-
keeping
$ 254,000
157,000
97,000
68,900
8,200
43,000
20,500
114,300
40,300
35,400
184,000
52,800
50,800
410,200
121,800
121,800
$ 25,800 $ 25,200 $ 25,400 $ (24,800)
20,500
15,100
"Allocated on the basis of program revehues.
The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $25,800 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?
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1A
What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?
Financial (disadvantage)
Req 18
Req 2A
Req 2B
Reg 1A
Req 1B >
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