solve this! step by step walkthrough preferred please. Home Meals On House- Total Nursing Wheels keeping Revenues...

solve this! step by step walkthrough preferred please.

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Home Meals On House- Total Nursing Wheels keeping Revenues... Variable expenses Contribution margin $900,000 $260,000 $400,000 $240,000 490,000 120,000 210,000 160,000 410,000 140,000 190,000 80,000 Fixed expenses: Depreciation 68,000 8,000 40,000 20,000 Liability insurance.. 42,000 20,000 7,000 15,000 Program administrators' salaries 115,000 40,000 38,000 37,000 General administrative overhead' 180,000 52,000 80,000 48,000 405,000 120,000 165,000 120,000 Total fixed expenses Net operating income (loss) 'Allocated on the basis of program revenues. $ 5,000 $20,000 $25,000 $ (40,000) The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $5,000 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. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued? Explain. 2. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run financial viability of its various services. Home Meals On House- Total Nursing Wheels keeping Revenues... Variable expenses Contribution margin $900,000 $260,000 $400,000 $240,000 490,000 120,000 210,000 160,000 410,000 140,000 190,000 80,000 Fixed expenses: Depreciation 68,000 8,000 40,000 20,000 Liability insurance.. 42,000 20,000 7,000 15,000 Program administrators' salaries 115,000 40,000 38,000 37,000 General administrative overhead' 180,000 52,000 80,000 48,000 405,000 120,000 165,000 120,000 Total fixed expenses Net operating income (loss) 'Allocated on the basis of program revenues. $ 5,000 $20,000 $25,000 $ (40,000) The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $5,000 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. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued? Explain. 2. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run financial viability of its various services.

Answer rating: 100% (QA)

1 To determine the financial advantage disadvantage of discontinuing the Housekeeping program we need to calculate the contribution margin of the Hous... View the full answer