html Ch. 12 Homework 2 Problem 12-19 Dropping or Retaining a Segment [Lo12-2) Ja
ID: 2579629 • Letter: H
Question
html Ch. 12 Homework 2 Problem 12-19 Dropping or Retaining a Segment [Lo12-2) 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 20 als OnHouse To tal Nursing Wheels keeping $925,000 $ 263,000$ 489,000% 253,000 194,000 155,000 98,000 Variable expenses Contribution margin Fixed expenses: 464,000 115,000 461,000 69,300 43,100 114,600 185,000 8,200 Depreciation Liability insurance Program administrators' salaries General administrative overhead* 7,800 15,100 38,900 35,100 81,800 50,600 168,900 121,500 49,000 26,400 46,100 $(23,500) 20,200 48,680 52,600 Total fixed expenses Net operating income (loss) Allocated on the basis of program revenues 0 .,e@ Type here to searchExplanation / Answer
Answer:
1
The financial advantage and disadvantage of discontinuing House Keeping program
for calculating advantage and disadvantage of discontinuing House Keeping program we need to prepare the comparative table with House keeping and shout House keeping program
With HK
W/O HK
Revenues
253,000
0
Variable Expenses
155,000
0
Contribution Margin
98,000
0
Fixed Expenses:
Depreciation
20,700
20700
Liability Insurance
15,100
0
Program administrators' salaries
35,100
0
General Admin OH*
50,600
50,600
Total fixed expenses
121,500
71,300
Net operating income (loss)
(23,500)
(71,300)
Increase in Net operating income (loss)
=71300-23500
=47800
_____________________________________________________________________-
2
Answer: NO
House Keeping program should not be discontinued as there is increase in loss by $47800. So it should be continued
______________________________________________
3
Segmented Income statement
Total
Home Nursing
Meals on Wheels
House-keeping
Revenues
925,000
263,000
409,000
253,000
Variable Expenses
464,000
115,000
194,000
155,000
Contribution Margin
461,000
148,000
215,000
98,000
Fixed Expenses:
Depreciation
69,300
8,200
40,400
20,700
Liability Insurance
43,100
20,200
7,800
15,100
Program administrators' salaries
114,600
40,600
38,900
35,100
Total Tractable Fixed Expanses
227,000
69,000
87,100
70,900
Program segment margin
234,000
79,000
127,900
27,100
less:
General Admin OH*
185,000
Net operating income (loss)
49,000
_________________________________________________
4
Yes, Segmented Income statement is more useful to management
With HK
W/O HK
Revenues
253,000
0
Variable Expenses
155,000
0
Contribution Margin
98,000
0
Fixed Expenses:
Depreciation
20,700
20700
Liability Insurance
15,100
0
Program administrators' salaries
35,100
0
General Admin OH*
50,600
50,600
Total fixed expenses
121,500
71,300
Net operating income (loss)
(23,500)
(71,300)
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