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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

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 $ 923,000 $ 267,000 $ 406,000 $ 250,000
Variable expenses 457,000 113,000 190,000 154,000
Contribution margin 466,000 154,000 216,000 96,000
Fixed expenses:
Depreciation 70,400 8,600 40,900 20,900
Liability insurance 43,500 20,400 7,300 15,800
Program administrators salaries 115,700 41,000 38,300 36,400
General administrative overhead* 184,600 53,400 81,200 50,000
Total fixed expenses 414,200 123,400 167,700 123,100
Net operating income (loss) $ 51,800 $ 30,600 $ 48,300 $ (27,100)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $51,800 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?

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