ackson 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 $ 924,000 $ 267,000 $ 401,000 $ 256,000 Variable expenses 476,000 116,000 202,000 158,000 Contribution margin 448,000 151,000 199,000 98,000 Fixed expenses: Depreciation 69,600 8,200 40,800 20,600 Liability insurance 44,300 20,700 7,800 15,800 Program administrators salaries 115,300 40,300 38,700 36,300 General administrative overhead* 184,800 53,400 80,200 51,200 Total fixed expenses 414,000 122,600 167,500 123,900 Net operating income (loss) $ 34,000 $ 28,400 $ 31,500 $ (25,900) *Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $34,000 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. 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?