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	$ 264,000	$ 406,000	$ 257,000
Variable expenses	475,000	115,000	206,000	154,000
Contribution margin	452,000	149,000	200,000	103,000
Fixed expenses:
Depreciation	69,600	8,900	40,300	20,400
Liability insurance	43,200	20,200	7,200	15,800
Program administrators salaries	115,900	40,600	39,000	36,300
General administrative overhead*	185,400	52,800	81,200	51,400
Total fixed expenses	414,100	122,500	167,700	123,900
Net operating income (loss)	$ 37,900	$ 26,500	$ 32,300	$ (20,900)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $37,900 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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?

Prepare a properly formatted segmented income statement.

What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

	Total	Home Nursing	Meals On Wheels	House-keeping
Revenues
Variable expenses
Contribution margin	0	0	0	0
Traceable fixed expenses:
Depreciation
Liability insurance
Program administrators salaries
Total traceable fixed expenses	0	0	0	0
Program segment margins	0	$0	$0	$0
General administrative overhead
Net operating income (loss)	0