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	$	920,000	$	262,000	$	408,000	$	250,000
Variable expenses		458,000		115,000		191,000		152,000
Contribution margin		462,000		147,000		217,000		98,000
Fixed expenses:
Depreciation		70,500		8,900		41,000		20,600
Liability insurance		43,800		20,500		7,300		16,000
Program administrators salaries		114,800		40,400		38,200		36,200
General administrative overhead*		184,000		52,400		81,600		50,000
Total fixed expenses		413,100		122,200		168,100		122,800
Net operating income (loss)	$	48,900	$	24,800	$	48,900	$	(24,800)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $48,900 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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?