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:

*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 $43,800 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, Ms. Miyama asked for more information about the financial advisability of perhaps 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 impact on net operating income by discontinuing housekeeping program?

1-b. Should the housekeeping program be discontinued?

	Yes
	No

2-a. Prepare a 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.

	Yes
	No

Meals On House Home Nursing Wheels keeping $ 914,000 S 261,000 S 403,000 S 250,000 193.000 151,000 99,000 Total Revenues Variable expenses Contribution margin Fixed expenses Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses Net operating income (loss) 458,000 456,000 114,000 47,000 210,000 69,800 44,300 115,300 182,800 412,200 40,300 7,700 38,700 80,600 167,300 20,900 15,600 35,600 50,000 122,100 8,600 21,000 41,000 52,200 122,800 S 43,800 S 24,200 S 42,700 $ (23,100)