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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 $ 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?

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