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 $267,000 $404,000 $259,000

Variable expenses 471,000 118,000 201,000 152,000

Contribution margin 459,000 149,000 203,000 107,000

Fixed expenses:

Depreciation 69,700 8,100 40,700 20,900

Liability insurance 43,800 20,500 7,800 15,500

Program administrators' salaries 114,300 40,800 38,400 35,100

General administrative overhead* 186,000 53,400 80,800 51,800

Total fixed expenses 413,800 122,800 167,700 123,300

Net operating income (loss) $45,200 $26,200 $35,300$ (16,300)

*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 $45,200 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. What is the 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?