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	$	929,000	$	270,000	$	407,000	$	252,000
Variable expenses		466,000		114,000		193,000		159,000
Contribution margin		463,000		156,000		214,000		93,000
Fixed expenses:
Depreciation		69,100		8,600		40,400		20,100
Liability insurance		44,000		20,700		7,800		15,500
Program administrators salaries		115,200		40,500		38,900		35,800
General administrative overhead*		185,800		54,000		81,400		50,400
Total fixed expenses		414,100		123,800		168,500		121,800
Net operating income (loss)	$	48,900	$	32,200	$	45,500	$	(28,800)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $48,900 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?