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	$ 922,000	$ 264,000	$ 401,000	$ 257,000
Variable expenses	463,000	114,000	192,000	157,000
Contribution margin	459,000	150,000	209,000	100,000
Fixed expenses:
Depreciation	69,200	8,500	40,400	20,300
Liability insurance	43,800	20,600	7,700	15,500
Program administrators salaries	115,700	40,200	38,900	36,600
General administrative overhead*	184,400	52,800	80,200	51,400
Total fixed expenses	413,100	122,100	167,200	123,800
Net operating income (loss)	$ 45,900	$ 27,900	$ 41,800	$ (23,800)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $45,900 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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?

ANSWER PER BELOW TABS:

What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued? Prepare a properly formatted segmented income statement. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services