PROBLEM 10-19A Dropping or Retaining a Segment [LO10-2] 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 heels, and housekeeping. Data on revenue and expenses for the seniors-home nursing, Meals On W past year follow: Home Meals On House- Total Nursing Wheelskeeping $900,000 $260,000 $400,000 $240,000 Revenues Variable expenses . Contribution margin Fixed expenses: 490,000 120,000 210,000 160,000 410,000 140,000 190,000 80,000 40,000 20,000 7,00015,000 8,000 Depreciation 68,000 Liability insurance 42,000 20,000 Program administrators' salaries. 115,000 40,000 General administrative overhead Total fixed expenses Net operating income (loss) Allocated on the basis of program revenues. 180,000 52,000 80,000 48,000 405,000 120,000 165,000 120,000 $ 5,000 $20,000 $25,000 $(40,000) The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the orga- nization's finances and considers the net operating income of $5,000 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more tion about the financial advisability of perhaps discontinuing the housekeeping program. informa 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. were dropped, bu None of the general administrative overhead would be avoided if the housekeeping program t the liability insurance and the salary of the program administrator would be avoided. Required 1. Should the Housekeeping program be discontinued? Explain. Show computations to support answer. Recast the above data in a format that would be more useful to management i financial viability of the various service 2. n assessing the long-run