ABC 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 $ 928,000 $ 266,000 $ 408,000 $ 254,000 Variable expenses 455,000 111,000 194,000 150,000 Contribution margin 473,000 155,000 214,000 104,000 Fixed expenses: Depreciation 69,400 8,500 40,100 20,800 Liability insurance 44,400 20,900 7,600 15,900 Program administrators salaries 115,100 40,400 38,300 36,400 General administrative overhead* 185,600 53,200 81,600 50,800 Total fixed expenses 414,500 123,000 167,600 123,900 Net operating income (loss) $ 58,500 $ 32,000 $ 46,400 $ (19,900) *Allocated on the basis of program revenues. The head administrator of ABC Services, considers last years net operating income of $58,500 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. 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? PrevQuestion 16 of 23 Total16 of 23Visit question mapNext