Question

1-b. Should the housekeeping program be discontinued? Yes Ο Νο 2-a. Prepare a segmented income statement. Home Nursing Meals On Wheels House keeping Totals Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services. Yes NO

Answer 1

What impact on net operating income by discountinuning House Keepting Totalif House Difference: net keeping is operating Current total dropped income Revenue 930000 672000 -258000 Varaible Expenses 485000 328000 157000 Contribution Marrgin 445000 344000 -101000 Fixed Cost Depreication 70400 70400 0 Liability Insurance 43800 28500 15300 Programe Administrators' salaries 115500 79200 36300 General Administrative overheads 186000 1 86000 Total Fixed Expense 415700 364100 51600 Net Operating Income (Loss) 29300 -20100 -49400 should the housekeeping programme be discontinues ? NO

Segmented Income Statement Meals on Home Nursing Wheels House Keeping Total 263000| 118000 1450001 409000 210000 1990000 2 58000 157000 101000 930000 485000 4450000 L Revenue Varaible Expenses Contribution Marrgin (loss Treaceable Fixed Expenses Depreication Liability Insurance Programe Administrators' salaries Total Traceable Fixed Expenses Programme segment Margin (loss) General Administrative overheads Net Operating Income (Loss) 9000 21000 40900 70900 74100 40500 7500 38300 86300 112700 20900 15300 36300 72500 28500 pool 70400 43800 115500 229700 215300 186000 29300 I Would a segmented income statement formate be more useful Answer : YES