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	$	922,000	$	261,000	$	402,000	$	259,000
Variable expenses		483,000		118,000		209,000		156,000
Contribution margin		439,000		143,000		193,000		103,000
Fixed expenses:
Depreciation		70,400		8,900		40,900		20,600
Liability insurance		42,800		20,100		7,600		15,100
Program administrators salaries		114,600		40,800		38,100		35,700
General administrative overhead*		184,400		52,200		80,400		51,800
Total fixed expenses		412,200		122,000		167,000		123,200
Net operating income (loss)	$	26,800	$	21,000	$	26,000	$	(20,200)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $26,800 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?