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:

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $46,200 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?

Home Meals On House- Total Nursing Wheels keeping $ 924,000 $ 265,000 $ 408,000 $ 251,000 464,000 119,000 195,000 150,000 460,000 146,000 213,000 101,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses Net operating income (loss) 69,800 43,300 115,900 184,800 413,800 46,200 $ 8,800 20,100 40,900 53,000 122,800 23,200 $ 40,500 20,500 7,700 15,500 38,100 36,900 81,600 50,200 167,900 123, 100 45,100 $(22,100) $ Reg 1A Reg 1B Reg 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Req1A Req 1B Reg 1A Reg 1B Req 2A Req 2B Should the Housekeeping program be discontinued? Yes ONO Prepare a properly formatted segmented income statement. Total Home Nursing Meals On Wheels House- keeping Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss) Reg 1A Req 1B Reg 2A Req 2B Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes O No