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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 seniorshome nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

		Total		Home Nursing		Meals On Wheels		House- keeping
Revenues	$	924,000	$	267,000	$	401,000	$	256,000
Variable expenses		476,000		116,000		202,000		158,000
Contribution margin		448,000		151,000		199,000		98,000
Fixed expenses:
Depreciation		69,600		8,200		40,800		20,600
Liability insurance		44,300		20,700		7,800		15,800
Program administrators salaries		115,300		40,300		38,700		36,300
General administrative overhead*		184,800		53,400		80,200		51,200
Total fixed expenses		414,000		122,600		167,500		123,900
Net operating income (loss)	$	34,000	$	28,400	$	31,500	$	(25,900)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $34,000 to be unsatisfactory; therefore, she is considering the possibility 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. 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:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented income statement.

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?

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