help, Managerial Accounting

Assignment Help:
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. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals On Wheels program delivers 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 operating 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 too small. (Last year’s 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 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:
1a.

What is the impact on net operating income by discontinuing housekeeping program? (Input the amount as a positive value. Omit the "$" sign in your response.)

Related Discussions:- help

Explain the categories of the activity cost drivers, Explain the categories...

Explain the categories of The activity cost drivers The activity cost drivers can broadly be classified into following three categories: 1) Transaction drivers: for exampl

Concentration banking, When the customers of the company are spread over br...

When the customers of the company are spread over broad geographical areas then in place of a particular collection centre the company opens collection centres at the regional stag

Explain the stock turnover ratio, Stock turnover ratio  Meaning: thi...

Stock turnover ratio  Meaning: this ratio establishes a relation ship between costs of goods sold and average inventory. Objective: the objective of component of this r

Rules of game theory, RULES OF GAME THEORY 1) The number of competitors...

RULES OF GAME THEORY 1) The number of competitors is finite. 2) There is a conflict of interests between the participants. 3) Each of these participants has available to

What are the advantages of incremental budgeting, Advantages of incremental...

Advantages of incremental budgeting a) The budget is stable and change is gradual b) Managers can operate their departments on a steady basis c) The system is relatively

Accounting for pension plans, how do i calculate the actuarial gains or los...

how do i calculate the actuarial gains or losses on the present value of plan obligations?

What are the disadvantages of activity based costing, Disadvantages of acti...

Disadvantages of activity based costing 1) It is essentially not the panacea for all ills. 2) It absorbs a lot of resources. 3) Too much emphasis on customer viability c

Select appropriate alternative courses of action, Select Appropriate Altern...

Select Appropriate Alternative Courses of Action In practice, decision-making includes choosing among competing alternative courses of action and choosing the alternative which

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

Relevant Cost, Outline Five characteristics of relevant cost

Outline Five characteristics of relevant cost

Write Your Message!

Captcha
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