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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	$	934,000	$	268,000	$	408,000	$	258,000
Variable expenses		473,000		119,000		197,000		157,000
Contribution margin		461,000		149,000		211,000		101,000
Fixed expenses:
Depreciation		68,900		8,100		40,500		20,300
Liability insurance		43,900		21,000		7,600		15,300
Program administrators salaries		116,000		40,700		38,600		36,700
General administrative overhead*		186,800		53,600		81,600		51,600
Total fixed expenses		415,600		123,400		168,300		123,900
Net operating income (loss)	$	45,400	$	25,600	$	42,700	$	(22,900)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $45,400 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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