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i safari File Edit View History Bookmarks Window Help [.] 23% L } Wed 15 Nov 11:45:57 AM Q Optirnal Resume at GEORGIA INSTITUTE OF Watch Transformers 3 Full Movie Free Connect Barlow C Three P Chapter 12 Homework G Saved Help Save & Exit Submit Check my work 5 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: 331 Hom.e Meals On House- eBook Total raing Wheels keeping $920,000 263,000 $ 405,000 S 252,000 156, 000 96.000 Revenues Variable expensea 476, 000 117,000 203,000 444,000 146,000 202,000 Contribution margin Fixed expenses: per Depreciation Liability insurance Program adminiatrators' salaries General administrative overhead 20,600 15,400 35,500 50,400 121-900 $ 32, 80024,100 34,600 S(25,900) 69, 700 13,400 114,100 184,000 40,600 7,500 38,300 81,000 411,200 121,900 167,400 8,500 20,500 40,300 52.600 Total fixed expenses litz Net operating income (1038) 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 $32,800 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 fromjob 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. Should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? O.JPG KPrev 5 of 6 Next >

Explanation / Answer

1a Current total Total if housekeeping is dropped Difference Revenues 920000 668000 -252000 Variable expenses 476000 320000 156000 Contribution margin 444000 348000 -96000 Fixed expenses: Depreciation 69700 69700 0 Liability insurance 43400 28000 15400 Program administrators’ salaries 114100 78600 35500 General administrative overhead 184000 184000 0 Total fixed expenses 411200 360300 50900 Net operating income (loss) 32800 -12300 -45100 Financial disadvantage = $45100 1b No 2a Total Home nursing Meals on wheels House-keeping Revenues 920000 263000 405000 252000 Variable expenses 476000 117000 203000 156000 Contribution margin 444000 146000 202000 96000 Traceable fixed expenses: Depreciation 69700 8500 40600 20600 Liability insurance 43400 20500 7500 15400 Program administrators’ salaries 114100 40300 38300 35500 Total traceable fixed expenses 227200 69300 86400 71500 Program segment margins 216800 76700 115600 24500 General administrative overhead 184000 Net operating income (loss) 32800 2b Yes

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