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 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	$	900,000	$	260,000	$	400,000	$	240,000
Variable expenses		490,000		120,000		210,000		160,000
Contribution margin		410,000		140,000		190,000		80,000
Fixed expenses:
Depreciation		68,000		8,000		40,000		20,000
Liability insurance		42,000		20,000		7,000		15,000
Program administrators salaries		115,000		40,000		38,000		37,000
General administrative overhead*		180,000		52,000		80,000		48,000
Total fixed expenses		405,000		120,000		165,000		120,000
Net operating income (loss)	$	5,000	$	20,000	$	25,000	$	(40,000)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organizations finances and considers the net operating income of $50,900 last year to be too small. (Last years results were very similar to the results for previous years and are representative of what would be expected in the future.) Therefore, she has asked for more information about the financial advisability of discontinuing the housekeeping program.

The depreciation in housekeeping is for a van that transports housekeepers and their equipment from job to job. If the 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:

1a.	What is the impact on net operating income by discontinuing housekeeping program? (Input the amount as apositive value.)

in net operating income by

$

1b.

Should the housekeeping program be discontinued?

	Yes
	No

2.

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

	Yes
	No