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Cumberland County Senior Services is a non-prot organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniorshome nursing, Meals on Wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals on Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow: Home Meals on House- Total Nursing Wheels keeping Revenues $1,062,000 $306,800 $472,000 $283,200 Variable expenses 592,600 145,200 255,000 192,400 Contribution margin 469,400 161,600 217,000 90,800 Fixed expenses: Depreciation 74,840 9,440 42,700 22,700 Liability insurance 48,660 22,700 8,800 17,160 Program administrators' salaries 126,700 44,500 40,700 41,500 General administrative overhead* 212,400 61,360 94,400 56,640 Total fixed expenses 462,600 138,000 186,600 138,000 Operating income (loss) $ 6,800 $ 23,600 $ 30,400 $(471200) *Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's nances and considers the operating income of $6,800 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ewa asked for more information about the financial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category is for a small van that is used to carry the housekeepers and their equipment from job to job. lfthe program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. 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. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. ::| 1-b. Should the housekeeping program be discontinued? 0 Yes 0 No 2. Would a segmented income statement format be more useful to management in assessing the long-run nancial viability of the various services? 0 Yes 0 No