Should the housekeeping program be discontinued

Assignment Help Financial Accounting
Reference no: EM1313030

Should a particular segment be dropped or continued. Provide reasons.,

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 o wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform testes ordered by their physicians. The meals on wheels program deliver a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow:

 

Total

Home Nursing

Meals on Wheels

House Keeping

Revenues....................................

$900,000

$260,000

$400,000

$240,000

Variable expenses...................

490,000

120,000

210,000

160,000

Contribution margin...............

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

Total fixed expenses.....................................

405,000

120,000

165,000

120,000

Net operting income (loss)................................

$5,000

$20,000

$25,000

$(40,000)

*Allocated on the basis of program revenues.
The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $5,000 last year to be razor-thin. (Last year's a results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more information about the financial advisability of perhaps 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. Depreciation charges assume zero salvage value. 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. Should the housekeeping program be discontinued? Explain. Show computations to support your answer.
2. Recast the above data in a format that would be more useful to management in assessing the long-run financial viability of the various services.

Reference no: EM1313030

Questions Cloud

Evaluate company''s net operating income : What effect would accepting this order have on the company's net operating income if a special price of $349.95 is offered per bracelet for this order? Should the special order be accepted at this price
Freed capacity to launch a new product : Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $65,000 per year. Should Climate-Control, Inc., accept the offer to buy the..
Computation of income elasticity : Compute the income elasticity of demand for product below, by using average values for quantities and incomes.
Generation of gametes : How many gametes can be generated from an individual along with the genotype CCDd? Utilize a drawing to display the possible ways homologous chromosomes can orient themselves.
Should the housekeeping program be discontinued : Should the housekeeping program be discontinued? Explain and Recast the above data in a format that would be more useful to management in assessing the long-run financial viability of the various services
Computation of arc elasticity of demand : Suppose that this price cut was completely responsible for its raise in revenues from 460 million yen in 1966 to 640 million yen in 1967. Compute the indicated arc elasticity of demand.
Generation of homozygous or heterozygous : This is the F1 generation in the Mendelian terms. Whether this generation homozygous or heterozygous? What color would its beans be (in other words, what is its phenotype)?
Show the classify costs associated with manufacturing firms : Classify Costs associated with manufacturing firms, merchandising firms or service firms
Computation of elasticity of demand : What elasticity of demand did the Village Administrator seem to assume here in his prediction for 1970- 1971? Compute the approximate elasticity of demand (round off, two decimal places is close enough).

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  Prepare the necessary journal entries for stone company

Prepare the necessary journal entries for Stone Company

  Determine the relavant costs

The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in fixed manufacturing overhead.

  What adjustment will have to be made at end of the period

If the allowance for doubtful accounts before any necessary adjustment is at $10,000, what adjustment will have to be made at the end of the period?

  Examine the operations of each company

Examine the operations of each company.  How is the company doing in this present economic environment?  Is the world economy affecting the company?  How?

  Determine the annual rate of return on investment

Determine the annual rate of return on investment? Use 360 day year in your calculation and evaluate the annual rate of return on investment? Use 360 day period

  Compute the book-value weights for each source of capital

Compute the book-value weights for each source of capital and Compute the market-value weights for each source of capital.

  Classify costs as either variable or fixed costs

Classify the costs as either variable or fixed costs.  Assume there are no mixed costs.  Enter the dollar amount of each cost in the appropriate column and total each classification.

  Determine the amount of gross profit

Determine the amount of gross profit to be recognized in each of the three years. Prepare all required journal entries for each of the years (credit "Various accounts" for construction costs incurred). Purpose a partial balance sheet for 2009 a..

  Perform an audit

Perform an audit for Rodriguez & Co. after the client's year-end. Due to time limitations

  Purpose a complete single-step income statement

Purpose a complete single-step income statement for the company and multiple-step income statement for the company (including gross margin, pretax income, and earnings per share)

  Identify the greatest problems virms

Reporting results Identify the greatest problems Virms is likely to have doing the audit

  Evaluate ending inventory and cost of goods sold

Evaluate ending inventory and cost of goods sold under each method, and then compare results.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd