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. Meals On. House-

Nursing Wheels keeping

Revenues $917,000 . $263,000 $402,000. $252,000

Variable expenses462,000 112,000. 194,000. 156,000

Contribution margin455,000 151,000. 208,000 96,000

Fixed expenses:

Depreciation 69,700. 8,800. 40,200. 20,700

Liability insurance 43,700. 20,500 7,700 15,500

Program administrators' salaries

114,600 40,300 38,500. 35,800

General administrative overhead*

183,400 52,600 80,400 50,400

Total fixed expenses411,400 122,200 166,800 122,400

Net operating income (loss)

$43,600 $28,800. $41,200. $(26,400)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $43,600 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. 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?