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Dropping or Retaining a Segment

Segmen 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 Meals On House- Home Nursing $ 932,000 $ 267,000 409,000 256,e00 118,000 149,0e0 keeping Total Wheels Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 152,eee 184,000 190,000 219,eee 460,000 472,000 40,100 7,600 38,400 81,800 69,200 44,000 116,000 8,400 20,600 20,700 15,800 37,000 51,200 40,600 53,400 186,400 ces Total fixed expenses 415,600 123,000 167,900 124,700 56,400 $ 26,e00 51,100 $ (20,700) Net operating income (1loss) "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 $56.400 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. Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping progra 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? 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? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Req 1B 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. 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? Complete this question by entering your answers in the tabs below. Req 2B Req 2A Req 1A Req 1B Should the Housekeepinq program be discontinued? OYes ONo Req 2A