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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	$	927,000	$	266,000	$	402,000	$	259,000
Variable expenses		462,000		117,000		194,000		151,000
Contribution margin		465,000		149,000		208,000		108,000
Fixed expenses:
Depreciation		68,900		8,200		40,200		20,500
Liability insurance		44,400		20,500		8,000		15,900
Program administrators salaries		115,300		40,300		38,100		36,900
General administrative overhead*		185,400		53,200		80,400		51,800
Total fixed expenses		414,000		122,200		166,700		125,100
Net operating income (loss)	$	51,000	$	26,800	$	41,300	$	(17,100)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $51,000 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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