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	$	927,000	$	262,000	$	406,000	$	259,000
Variable expenses		473,000		111,000		205,000		157,000
Contribution margin		454,000		151,000		201,000		102,000
Fixed expenses:
Depreciation		70,200		8,700		40,600		20,900
Liability insurance		43,800		21,000		7,600		15,200
Program administrators salaries		115,800		40,800		38,200		36,800
General administrative overhead*		185,400		52,400		81,200		51,800
Total fixed expenses		415,200		122,900		167,600		124,700
Net operating income (loss)	$	38,800	$	28,100	$	33,400	$	(22,700)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $38,800 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?

What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued? Yes ONO Reg 1A Req 1B Reg 2A Reg 2B Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) Would a segmented income statement format be more useful to management in assessing the long-run finan the various services? Yes ONO