Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live
Question:
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:
Total | Home Nursing | Meals On Wheels | House-keeping | |
---|---|---|---|---|
Revenues | $ 921,000 | $ 263,000 | $ 403,000 | $ 255,000 |
Variable expenses | 475,000 | 119,000 | 205,000 | 151,000 |
Contribution margin | 446,000 | 144,000 | 198,000 | 104,000 |
Fixed expenses: | ||||
Depreciation | 69,700 | 8,300 | 40,500 | 20,900 |
Liability insurance | 43,200 | 20,200 | 7,300 | 15,700 |
Program administrators' salaries | 114,400 | 40,500 | 38,800 | 35,100 |
General administrative overhead* | 184,200 | 52,600 | 80,600 | 51,000 |
Total fixed expenses | 411,500 | 121,600 | 167,200 | 122,700 |
Net operating income (loss) | $ 34,500 | $ 22,400 | $ 30,800 | $ (18,700) |
*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 $34,500 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.
HERE IS THE EXCEL (you will need this to help with the CIA):
Total | Home Nursing | Meals On Wheels | House-keeping | ||
Revenues | $ 919,000 | $ 265,000 | $ 402,000 | $ 252,000 | |
Variable expenses | $458,000 | $112,000 | $193,000 | $153,000 | |
Contribution margin | $461,000 | $153,000 | $209,000 | $99,000 | |
Fixed expenses: | |||||
Depreciation | $69,500 | $8,100 | $40,800 | $20,600 | |
Liability insurance | $43,200 | $20,200 | $7,500 | $15,500 | |
Program administrators' salaries | $116,300 | $40,800 | $38,800 | $36,700 | |
General administrative overhead* | $183,800 | $53,000 | $80,400 | $50,400 | |
Total fixed expenses | $412,800 | $122,100 | $167,500 | $123,200 | |
Net operating income (loss) | $ 48,200 | $ 30,900 | $ 41,500 | $ (24,200) | |
1-a: What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? | |||||
Contribution margin of housekeeping | $(99,000) | ||||
Liability insurance | $15,500 | ||||
Program administrators' salaries | $36,700 | ||||
Financial advantage(Disadvantage) | $(46,800) | ||||
1-b: Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? | |||||
No | |||||
2-a: make a properly formatted segmented income statement. | Total | Home Nursing | Meals on Wheels | Housekeeping | |
Revenues | $ 919,000 | $ 265,000 | $ 402,000 | $ 252,000 | |
Variable Expenses | $458,000 | $112,000 | $193,000 | $153,000 | |
Contribution Margin | $461,000 | $153,000 | $209,000 | $99,000 | |
Traceable Fixed Expenses: | |||||
Depreciation | $69,500 | $8,100 | $40,800 | $20,600 | |
Liability Insurance | $43,200 | $20,200 | $7,500 | $15,500 | |
Program administrators' salaries | $116,300 | $40,800 | $38,800 | $36,700 | |
Total traceable fixed expenses | $229,000 | $69,100 | $87,100 | $72,800 | |
Program segment margins | $232,000 | $83,900 | $121,900 | $26,200 | |
General administrative overhead | $183,800 | ||||
Net operating income (loss) | $48,200 | ||||
2-b: Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? | |||||
Yes |
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What we need from you:
- PLEASE ANSWER THE CIA QUESTION WITH A LOT OF DETAIL. THIS IS THE MOST IMPORTANT PART!
- talk about the FINANCIAL aspect!
- PLEASE EXPLAIN THE CHANGES THAT WILL BE MADE WITH THE DECISION AND WHAT EFFECT IT WILL TAKE ON THE financial aspect!
- PLEASE INCLUDE what is the financial impact? include the contribution margin, financial advantage/ disadvantage, ect, and explain using the calculations from the excel
- THINGS TO MENTION WHEN ANALYZING THE CIA (YOU HAVE TO MENTION THESE): housekeeping was losing money so that is something to talk about because without some type of change they will continue to lose money.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer