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	$	928,000	$	268,000	$	408,000	$	252,000
Variable expenses		480,000		119,000		207,000		154,000
Contribution margin		448,000		149,000		201,000		98,000
Fixed expenses:
Depreciation		70,600		9,000		40,900		20,700
Liability insurance		43,200		20,100		7,800		15,300
Program administrators salaries		114,200		40,900		38,200		35,100
General administrative overhead*		185,600		53,600		81,600		50,400
Total fixed expenses		413,600		123,600		168,500		121,500
Net operating income (loss)	$	34,400	$	25,400	$	32,500	$	(23,500)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $34,400 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?