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	$	923,000	$	268,000	$	400,000	$	255,000
Variable expenses		471,000		118,000		196,000		157,000
Contribution margin		452,000		150,000		204,000		98,000
Fixed expenses:
Depreciation		69,500		8,300		40,600		20,600
Liability insurance		43,300		20,600		7,600		15,100
Program administrators salaries		115,100		40,300		38,100		36,700
General administrative overhead*		184,600		53,600		80,000		51,000
Total fixed expenses		412,500		122,800		166,300		123,400
Net operating income (loss)	$	39,500	$	27,200	$	37,700	$	(25,400)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $39,500 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.