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	$	917,000	$	265,000	$	402,000	$	250,000
Variable expenses		484,000		120,000		208,000		156,000
Contribution margin		433,000		145,000		194,000		94,000
Fixed expenses:
Depreciation		69,500		8,300		40,600		20,600
Liability insurance		43,300		20,900		7,100		15,300
Program administrators salaries		115,300		40,700		38,200		36,400
General administrative overhead*		183,400		53,000		80,400		50,000
Total fixed expenses		411,500		122,900		166,300		122,300
Net operating income (loss)	$	21,500	$	22,100	$	27,700	$	(28,300)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $21,500 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?