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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	$	930,000	$	264,000	$	407,000	$	259,000
Variable expenses		464,000		110,000		198,000		156,000
Contribution margin		466,000		154,000		209,000		103,000
Fixed expenses:
Depreciation		70,300		8,600		40,700		21,000
Liability insurance		43,000		20,200		7,200		15,600
Program administrators salaries		116,100		40,600		38,600		36,900
General administrative overhead*		186,000		52,800		81,400		51,800
Total fixed expenses		415,400		122,200		167,900		125,300
Net operating income (loss)	$	50,600	$	31,800	$	41,100	$	(22,300)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $50,600 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. 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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