Jackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homes-home nursing, Meals on Wheels, and housekeeping. Revenue and expense data 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) *Allocated on the basis of program revenues. Meals on Wheels $ 406,000 Housekeeping $ 251,000 Total $ 919,000 482,000 Home Nursing $262,000 119,000 203,000 160,000 437,000 143,000 203,000 91,000 70,200 8,700 40,600 20,900 43,000 20,600 7,100 15,300 115,900 40,900 38,300 36,700 183,800 52,400 81,200 50,200 412,900 122,600 167,200 123,100 $ 24,100 $ 20,400 $ 35,800 $ (32,100) The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program. The depreciation in housekeeping is for a small van 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 was 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 providing three services to seniors who live in their own homes-home nursing, Meals on Wheels, and housekeeping. Revenue and expense data 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) *Allocated on the basis of program revenues. Meals on Wheels $ 406,000 Housekeeping $ 251,000 Total $ 919,000 482,000 Home Nursing $262,000 119,000 203,000 160,000 437,000 143,000 203,000 91,000 70,200 8,700 40,600 20,900 43,000 20,600 7,100 15,300 115,900 40,900 38,300 36,700 183,800 52,400 81,200 50,200 412,900 122,600 167,200 123,100 $ 24,100 $ 20,400 $ 35,800 $ (32,100) The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program. The depreciation in housekeeping is for a small van 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 was 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?
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 71P
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Transcribed Image Text:Jackson County Senior Services is a nonprofit organization providing three services to seniors who live in their own homes-home
nursing, Meals on Wheels, and housekeeping. Revenue and expense data 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)
*Allocated on the basis of program revenues.
Meals on
Wheels
$ 406,000
Housekeeping
$ 251,000
Total
$ 919,000
482,000
Home
Nursing
$262,000
119,000
203,000
160,000
437,000
143,000
203,000
91,000
70,200
8,700
40,600
20,900
43,000
20,600
7,100
15,300
115,900
40,900
38,300
36,700
183,800
52,400
81,200
50,200
412,900
122,600
167,200
123,100
$ 24,100
$ 20,400
$ 35,800
$ (32,100)
The head administrator of Jackson County Senior Services, Judith Miyama, is considering discontinuing the housekeeping program.
The depreciation in housekeeping is for a small van 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 was 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?
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