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	$	930,000	$	266,000	$	408,000	$	256,000
Variable expenses		473,000		114,000		208,000		151,000
Contribution margin		457,000		152,000		200,000		105,000
Fixed expenses:
Depreciation		69,700		8,900		40,300		20,500
Liability insurance		44,500		20,700		7,900		15,900
Program administrators salaries		114,300		40,100		38,400		35,800
General administrative overhead*		186,000		53,200		81,600		51,200
Total fixed expenses		414,500		122,900		168,200		123,400
Net operating income (loss)	$	42,500	$	29,100	$	31,800	$	(18,400)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $42,500 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?