Women's Studies 2270A/B Chapter : Custody
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Jackson County Senior Services is a nonprofit organizationdevoted to providing essential services to seniors who live intheir own homes within the Jackson County area. Three services areprovided for seniorsâhome nursing, Meals On Wheels, andhousekeeping. Data on revenue and expenses for the past yearfollow: |
| Total | HomeNursing | Meals OnWheels | House- keeping | |||||
| Revenues | $ | 929,000 | $ | 268,000 | $ | 404,000 | $ | 257,000 |
| Variableexpenses | 470,000 | 117,000 | 200,000 | 153,000 | ||||
| Contributionmargin | 459,000 | 151,000 | 204,000 | 104,000 | ||||
| Fixed expenses: | ||||||||
| Depreciation | 69,500 | 8,300 | 40,900 | 20,300 | ||||
| Liability insurance | 43,800 | 20,800 | 7,700 | 15,300 | ||||
| Programadministratorsâ salaries | 115,700 | 41,000 | 38,400 | 36,300 | ||||
| Generaladministrative overhead* | 185,800 | 53,600 | 80,800 | 51,400 | ||||
| Total fixedexpenses | 414,800 | 123,700 | 167,800 | 123,300 | ||||
| Net operating income(loss) | $ | 44,200 | $ | 27,300 | $ | 36,200 | $ | (19,300) |
| *Allocated on the basis ofprogram revenues. |
The head administrator of JacksonCounty Senior Services, Judith Miyama, is concerned about theorganizationâs finances and considers the net operating income of$44,200 last year to be razor-thin. (Last year's results were verysimilar to the results for previous years and are representative ofwhat would be expected in the future.) She feels that theorganization should be building its financial reserves at a morerapid rate in order to prepare for the next inevitable recession.After seeing the above report, Ms. Miyama asked for moreinformation about the financial advisability of perhapsdiscontinuing the housekeeping program. |
| The depreciation in housekeepingis for a small van that is used to carry the housekeepers and theirequipment from job to job. If the program were discontinued, thevan would be donated to a charitable organization. None of thegeneral administrative overhead would be avoided if thehousekeeping program were dropped, but the liability insurance andthe salary of the program administrator would be avoided.
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| 2-b. | Would a segmented income statement format be more useful tomanagement in assessing the long-run financial viability of thevarious services. | ||||
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The Empire Hotel is a full-service hotel in a large city. Empireis organized into three departments that are treated as investmentcenters. Budget information for the coming year for these threedepartments is shown as follows. The managers of each of thedepartments are evaluated and bonuses are awarded each year basedon ROI.
| Empire Hotel | |||||||||||
| Hotel Rooms | Restaurants | Health Spa | |||||||||
| Averageinvestment | $ | 10,000,000 | $ | 6,250,000 | $ | 1,250,000 | |||||
| Salesrevenue | $ | 11,250,000 | $ | 2,500,000 | $ | 800,000 | |||||
| Operatingexpenses | 9,450,000 | 1,625,000 | 650,000 | ||||||||
| Operatingearnings | $ | 1,800,000 | $ | 875,000 | $ | 150,000 | |||||
The manager of the restaurants department complains that salesand resulting earnings for the restaurants are not higher due tothe poor reputation of the hotel rooms department. Because thehotel rooms department does not have the best housekeeping staff,the overall reputation of the hotel is slipping. The manager of thehotel rooms department counters that, to keep operating expensesunder control and improve ROI, wages for housekeeping have beencut. The manager of the restaurants department has requested thatother evaluation techniques such as residual income or a balancedscorecard approach be considered in an effort to resolve thisproblem.
Required:
Consider which balanced scorecard measures might be useful tothe Empire Hotel in evaluating the Hotel Rooms Department.
a. Which organizational goals should be set toimprove the reputation of the hotel rooms? (You may selectmore than one answer.)
__ Cleanliness
__ Change in satisfaction per dollar of supplies
__ Value per dollar
__ Supervisory time.
__ Attractiveness
__ Cleaning supplies used
__ Staff Friendliness
b. Which measurement and resources can beemployed to measure whether goals are being met? (You mayselect more than one answer.)
__ Surveys of customer satisfaction
__ Value per dollar
__ Cleaning supplies used
__ Supervisory time
__ Time of housekeeping per room
__ Investment in maintenence
c. Which items provide the feedback necessaryto evaluate and reward employees for progress made towardsachieving the goals? (You may select more than oneanswer.)
__ Change in satisfaction per hour ofhousekeeping
__ Housekeeping staff friendliness
__ Change in satisfaction per hour of supervisory time
__ Time of housekeeping per room
__ Change in satisfaction per dollar of maintenance
__ Change in satisfaction per dollar of supplies used
__ Change in satisfaction per dollar of supplies