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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	$ 263,000	$ 405,000	$ 259,000
Variable expenses	474,000	117,000	206,000	151,000
Contribution margin	453,000	146,000	199,000	108,000
Fixed expenses:
Depreciation	70,100	8,900	41,000	20,200
Liability insurance	43,700	20,700	7,200	15,800
Program administrators salaries	116,200	40,500	38,700	37,000
General administrative overhead*	185,400	52,600	81,000	51,800
Total fixed expenses	415,400	122,700	167,900	124,800
Net operating income (loss)	$ 37,600	$ 23,300	$ 31,100	$ (16,800)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $37,600 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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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