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

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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 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	$	929,000	$	268,000	$	402,000	$	259,000
Variable expenses		472,000		116,000		205,000		151,000
Contribution margin		457,000		152,000		197,000		108,000
Fixed expenses:
Depreciation		70,200		8,700		40,800		20,700
Liability insurance		43,500		20,500		7,200		15,800
Program administrators salaries		115,500		40,500		38,700		36,300
General administrative overhead*		185,800		53,600		80,400		51,800
Total fixed expenses		415,000		123,300		167,100		124,600
Net operating income (loss)	$	42,000	$	28,700	$	29,900	$	(16,600)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $42,000 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?

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 Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Financial advantage Financial (disadvantage) Req 1A Reg 1B Req 2A Req 2B Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping 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 0 0 $ 0 $ 0 0 0