Problem 12-19 Dropping or Retaining a Segment [LO12-2] 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: Home Meals On House Nursing Wheels keeping 922,000 $ 267,000 $ 402,000 253,000 467,000 117,000 191,000 159,000 94,000 Total Revenues Variable expenses Contribution margin 455,000 150,000 211,000 Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* 70,100 44,000 115,100 184,400 413,600 $ 41,400 20, 500 15,800 35,400 50,600 122,300 26,500 $ 43,200 $(28,300) 8,700 20, 500 40,900 53,400 123,500 40,900 7,700 38,800 80,400 167,800 Total fixed expenses Net operating income (loss) Allocated on the basis of program revenues The head administrator of Jackson County Senior Services, Judith Miyama, considers last year's net operating income of $41,400 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? Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 2A Req 2B What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Required 1 Required 2 Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Product A Product B Product C Sell at split-off point? Process further? Required 1 Required 2