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	$	924,000	$	268,000	$	402,000	$	254,000
Variable expenses		477,000		118,000		206,000		153,000
Contribution margin		447,000		150,000		196,000		101,000
Fixed expenses:
Depreciation		69,400		8,700		40,300		20,400
Liability insurance		43,200		20,200		7,400		15,600
Program administrators salaries		113,800		40,200		38,000		35,600
General administrative overhead*		184,800		53,600		80,400		50,800
Total fixed expenses		411,200		122,700		166,100		122,400
Net operating income (loss)	$	35,800	$	27,300	$	29,900	$	(21,400)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $35,800 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?