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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
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 $ 405,000 191,000 214,000 Housekeeping $ 250,000 156,000 Total $ 922,000 459,000 463,000 Home Nursing $ 267,000 112,000 155,000 94,000 70,300 8,600 40,900 20,800 43,800 20,800 7,200 15,800 116,200 40,600 38,700 36,900 184,400 53,400 81,000 50,000 414,700 123,400 167,800 123,500 $ 48,300 $ 31,600 $ 46,200 $ (29,500) 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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