90.2K

Verified Solution

Link Copied!

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$).$ Data on

revenue and expenses for the past year follow:

The head administrator of Jackson County Senior Services 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 results were very similar to the results for previous years and are

representative of what would be expected in the future. Housekeeping is clearly an area of

concern. The depreciation in housekeeping is for a large van that is used to carry the

housekeepers and their equipment from job to job. Every two years a new van is required at a

cost of $$40,000.$ Thus, depreciation is $$20,000$ per year. If the program were discontinued,

the current van, which is one year old, 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. Should the housekeeping.program be discontinued? Does your decision depend on

the time horizon $($short$-$run versus long$-$run$)?$ Show computations to specifically support your

conclusion$($s$).$ Use the table function to organize your answer. Be sure to discuss how you

considered the depreciation charges.

Answer & Explanation Solved by verified expert

See Answer