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	$	933,000	$	267,000	$	407,000	$	259,000
Variable expenses		470,000		112,000		202,000		156,000
Contribution margin		463,000		155,000		205,000		103,000
Fixed expenses:
Depreciation		69,800		8,600		40,600		20,600
Liability insurance		43,900		20,800		7,700		15,400
Program administrators salaries		114,500		40,300		38,500		35,700
General administrative overhead*		186,600		53,400		81,400		51,800
Total fixed expenses		414,800		123,100		168,200		123,500
Net operating income (loss)	$	48,200	$	31,900	$	36,800	$	(20,500)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $48,200 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?