1a. What is the financial advantage (disadvantage) of discontinuing the housekeeping program?

1b. Should the housekeeping program be discontinued?

2a. Prepare a properly formatted segmented income statement.

2b. Would a segmented income statement be more useful to management in assessing the long run financial viability of the various services?

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 seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: HomeMeals Hou Revenues Variable expenses Contribution margin Fixed expensess 927,000 $263,000 $ 408,000 $256,00 465,000 113,000 198,000 154,000 462,000 150,000 210,000 102,000 69,400 43,500 21,000 116,100 185,400 52,600 20,300 7,20015,300 36, 800 1,200 Depreciation 8,500 40,600 Liability insurance 38,300 81,600 Program administrators' salaries 41,000 General administrative overhead* Total fixed expenses Net operating income (loss) 414.400 123,100 167,700 123,600 $ 47,600 26,900 $ 42,300 $(21,600) Allocated on the basis of program revenues The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $47600 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