Jackson County Senior Services is a nonprofit organizationdevoted to providing essential services to seniors who live intheir own homes within the Jackson County area. Three services areprovided for seniors—home nursing, Meals On Wheels, andhousekeeping. Data on revenue and expenses for the past yearfollow:

		Total		Home Nursing		Meals On Wheels		House- keeping
Revenues	$	925,000	$	263,000	$	406,000	$	256,000
Variable expenses		471,000		114,000		204,000		153,000
Contribution margin		454,000		149,000		202,000		103,000
Fixed expenses:
Depreciation		69,400		8,100		40,500		20,800
Liability insurance		42,800		20,200		7,300		15,300
Program administrators’ salaries		114,800		40,000		38,700		36,100
General administrative overhead*		185,000		52,600		81,200		51,200
Total fixed expenses		412,000		120,900		167,700		123,400
Net operating income (loss)	$	42,000	$	28,100	$	34,300	$	(20,400)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, JudithMiyama, considers last year’s net operating income of $42,000 to beunsatisfactory; therefore, she is considering the possibility ofdiscontinuing the housekeeping program.

The depreciation in housekeeping is for a small van that is usedto carry the housekeepers and their equipment from job to job. Ifthe program were discontinued, the van would be donated to acharitable organization. None of the general administrativeoverhead would be avoided if the housekeeping program were dropped,but the liability insurance and the salary of the programadministrator would be avoided.

Required:

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

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented incomestatement.

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