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	$	926,000	$	269,000	$	405,000	$	252,000
Variable expenses		471,000		119,000		202,000		150,000
Contribution margin		455,000		150,000		203,000		102,000
Fixed expenses:
Depreciation		69,800		8,900		40,600		20,300
Liability insurance		43,800		20,700		7,500		15,600
Program administrators salaries		115,400		40,600		39,000		35,800
General administrative overhead*		185,200		53,800		81,000		50,400
Total fixed expenses		414,200		124,000		168,100		122,100
Net operating income (loss)	$	40,800	$	26,000	$	34,900	$	(20,100)

*Allocated based on program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $40,800 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?

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