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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 $ 929,000 $ 265,000 $ 410,000 $ 254,000
Variable expenses 468,000 113,000 199,000 156,000
Contribution margin 461,000 152,000 211,000 98,000
Fixed expenses:
Depreciation 69,600 8,800 40,200 20,600
Liability insurance 43,400 20,800 7,500 15,100
Program administrators salaries 115,300 40,800 38,800 35,700
General administrative overhead* 185,800 53,000 82,000 50,800
Total fixed expenses 414,100 123,400 168,500 122,200
Net operating income (loss) $ 46,900 $ 28,600 $ 42,500 $ (24,200)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $46,900 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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