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	$	924,000	$	261,000	$	403,000	$	260,000
Variable expenses		467,000		117,000		199,000		151,000
Contribution margin		457,000		144,000		204,000		109,000
Fixed expenses:
Depreciation		69,900		8,800		40,400		20,700
Liability insurance		43,800		20,200		7,800		15,800
Program administrators salaries		113,900		40,500		38,200		35,200
General administrative overhead*		184,800		52,200		80,600		52,000
Total fixed expenses		412,400		121,700		167,000		123,700
Net operating income (loss)	$	44,600	$	22,300	$	37,000	$	(14,700)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $44,600 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?

Req 1A Reg 1B Reg 2A Reg 2B Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping 0 0 0 0 Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) 0 $ 0 $ 0 $