FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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:
Revenues
Variable expenses
Contribution margin
Fixed expenses:
Depreciation
Liability insurance
Program administrators' salaries
General administrative overhead*
Total fixed expenses
Net operating income (loss)
Req 1A
Total
$ 930,000
481,000
449,000
Req 1B
69,800
42,700
Req 2A
113,800
186,000
412,300
$ 36,700
Req 2B
Home Nursing
$ 266,000
120,000
146,000
Complete this question by entering your answers in the tabs below.
8,500
20,300
40,100
53,200
122, 100
$ 23,900
Req 1A
*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 $36,700 to
be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.
Meals On
Wheels
$ 404,000
208,000
196,000
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.
40,500
7,200
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?
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?
House-
keeping
$ 260,000
153,000
107,000
Req 1B >
20,800
15, 200
38,500
80,800
167,000
$ 29,000 $ (16,200)
What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?
Financial (disadvantage)
35,200
52,000
123, 200
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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) Req 1A Total $ 930,000 481,000 449,000 Req 1B 69,800 42,700 Req 2A 113,800 186,000 412,300 $ 36,700 Req 2B Home Nursing $ 266,000 120,000 146,000 Complete this question by entering your answers in the tabs below. 8,500 20,300 40,100 53,200 122, 100 $ 23,900 Req 1A *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 $36,700 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. Meals On Wheels $ 404,000 208,000 196,000 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. 40,500 7,200 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? 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? House- keeping $ 260,000 153,000 107,000 Req 1B > 20,800 15, 200 38,500 80,800 167,000 $ 29,000 $ (16,200) What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Financial (disadvantage) 35,200 52,000 123, 200
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