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 $ 926,000 $ 269,000 $ 401,000 $ 256,000

Variable expenses 469,000 117,000 199,000 153,000

Contribution margin 457,000 152,000 202,000 103,000

Fixed expenses:

Depreciation 70,100 8,700 40,500 20,900

Liability insurance 43,300 20,200 7,400 15,700

Program administrators salaries 114,400 40,300 38,800 35,300

General administrative overhead* 185,200 53,800 80,200 51,200

Total fixed expenses 413,000 123,000 166,900 123,100

Net operating income (loss) $ 44,000 $ 29,000 $ 35,100 $ (20,100)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $44,000 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?

2-a. Prepare a properly formatted segmented income statement.