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	$	920,000	$	262,000	$	402,000	$	256,000
Variable expenses		464,000		115,000		197,000		152,000
Contribution margin		456,000		147,000		205,000		104,000
Fixed expenses:
Depreciation		69,900		8,400		41,000		20,500
Liability insurance		44,200		20,900		7,300		16,000
Program administrators salaries		115,400		40,800		38,700		35,900
General administrative overhead*		184,000		52,400		80,400		51,200
Total fixed expenses		413,500		122,500		167,400		123,600
Net operating income (loss)	$	42,500	$	24,500	$	37,600	$	(19,600)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $42,500 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?