10) Jackson Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson 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	$ 921,000	$ 264,000	$ 403,000	$ 254,000
Variable expenses	468,000	119,000	190,000	159,000
Contribution margin	453,000	145,000	213,000	95,000
Fixed expenses:
Depreciation	70,300	8,400	41,000	20,900
Liability insurance	43,800	21,000	7,600	15,200
Program administrators salaries	114,700	40,000	38,700	36,000
General administrative overhead*	184,200	52,800	80,600	50,800
Total fixed expenses	413,000	122,200	167,900	122,900
Net operating income (loss)	$ 40,000	$ 22,800	$ 45,100	$ (27,900)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $40,000 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?