San Diego State University Operations And Supply Chain Management Assignment Help - Units

Question - 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
Revenu
es $ 934,000 $ 26 ...Read More 8,000 $ 407,000 $ 259,000
Variable
expense
s
473,000 115,000 207,000 151,000

Contribu
tion
margin
461,000 153,000 200,000 108,000

Fixed
expense
s:

Depreci
ation 69,900 8,400 40,800 20,700
Liability
insuranc
e
43,800 20,200 7,900 15,700
Program
administ
rators’
salaries
115,700 40,100 38,700 36,900
General
administ
rative
overhea
d*
186,800 53,600 81,400 51,800

Total
fixed
expense
s
416,200 122,300 168,800 125,100

Net
operatin
g
income
(loss)
$ 44,800 $ 30,700 $ 31,200 $ (17,100)

















*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 $44,800 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 apositive value. Omit the "$" sign in your response.)

Questions No.2
Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is
currently manufacturing all of its own component parts. An outside supplier has offered to sell a
thermostat to Climate-Control for $31 per unit. To evaluate this offer, Climate-Control, Inc., has
gathered the following information relating to its own cost of producing the thermostat internally:

Per Unit 14,600 Units

per year
Direct materials $ 9 $ 131,400
Direct labor 11 160,600
Variable manufacturing
overhead 2 29,200
Fixed manufacturing
overhead, traceable 6* 87,600
Fixed manufacturing
overhead, common, but
allocated
13 189,800

Total cost $ 41 $ 598,600









*40% supervisory salaries; 60% depreciation of special equipment (no resale value).

Required:
1a.
Assuming that the company has no alternative use for the facilities now being used to produce
the thermostat, compute the total cost of making and buying the parts. (Round your Fixed
manufacturing overhead per unit rate to two decimals and your final answers to the
nearest dollar amount.Omit the "$" sign in your response.)

Make Buy
Total relevant cost (14,600 units) $ $



2a.
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 $116,360
per year. Compute the total cost of making and buying the parts. (Round your Fixed
manufacturing overhead per unit rate to two decimals and your final answers to the
nearest dollar amount. Omit the "$" sign in your response.)

Make Buy

Total relevant cost (14,600 units) $ $ ...Read Less

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