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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 $ 932,000 $ 265,000 $ 408,000 $ 259,000
Variable expenses 472,000 111,000 203,000 158,000
Contribution margin 460,000 154,000 205,000 101,000
Fixed expenses:
Depreciation 69,900 8,600 40,400 20,900
Liability insurance 43,700 20,400 7,800 15,500
Program administrators salaries 114,700 40,600 38,200 35,900
General administrative overhead* 186,400 53,000 81,600 51,800
Total fixed expenses 414,700 122,600 168,000 124,100
Net operating income (loss) $ 45,300 $ 31,400 $ 37,000 $ (23,100)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $45,300 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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