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Transcript of report
Panlaqui, Mary Grace
CURRENT BUSINESS NEWS
Current Business News
The main-share Philippine Stock Exchange index added 67.03 points or 1.1 percent to close at 6,139.21. A new intra-day peak was also hit at 6,150.62.
For the week, the local index was up 87.46 points or 1.44 percent from last week’s finish.
PLDT, the day’s most actively traded stock, was up 3.17 percent while Globe surged 4.67 percent. With PLDT’s gain, it was back as the stock market’s most valuable company with a market capitalization of P586.37 billion, albeit with a narrow margin over challenger SM Investment’s market capitalization of P585.59 billion.
Investors also loaded up on shares of SM Prime, Ayala Corp., BDO, SM Investments, Philex, Jollibee and Meralco. Among the non-index stocks, GT Capital, FLI, D&L and Atlas gained in heavy volume.
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:
(a)What is the amount of the change in net income if the housekeeping unit is dropped?
Recast the above data in a format that would be more useful to management in assessing the long-run financial viability of the various services.
Case Analysis 1
No, the housekeeping program should not be discontinued. It is actually generating a positive program segment margin and is, of course, providing a valuable service to seniors.
Dropping or Retaining a Segment
Dropping or Retaining a Segment
The depreciation in housekeeping is for a small van. If the program were discontinued, the van would be donated to a charitable organization. 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.
Case analysis: To give the administrator of the entire organization a clearer picture of the financial viability of each of the organization’s programs, the general administrative overhead should not be allocated. It is a common cost that should be deducted from the total program segment margin. Following the format introduced in an earlier chapter for a segmented income statement, a better income statement would be: