Problem 11-19 (Algo) Dropping or Retaining a Segment [LO11-2] 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 seniors-home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) *Allocated on the basis of program revenues. Total $ 922,000 462,000 460,000 Home Nursing $ 268,000 114,000 154,000 Meals On Wheels House-keeping $ 404,000 193,000 211,000 $ 250,000 155,000 95,000 69,400 8,300 40,700 20,400 43,700 20,200 7,600 15,900 114,900 40,800 38,800 35,300 184,400 53,600 80,800 50,000 412,400 122,900 167,900 121,600 $ 47,600 $ 31,100 $ 43,100 $ (26,600) The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $47,600 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. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, 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?