EXERCISE 10-2 Dropping or Retaining a Segment [LO2] 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- Total Nursing Wheels keeping Revenues. $900,000 $260,000 $400,000 $240,000 Variable expenses. 490,000 120,000 210,000 160,000 Contribution margin 410,000 140,000 190,000 80,000 Fixed expenses: Depreciation .... 68,000 8,000 40,000 20,000 Liability ty Insurance 42,000 20,000 7,000 15,000 Program administrators' salaries 115,000 40,000 38,000 37,000 General administrative overhead 180,000 52,000 80,000 48,000 Total fixed expenses 405,000 120,000 165,000 120,000 Net operating income (loss).... $ 5,000 $ 20,000 $ 25,000 $(40,000 *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $5,000 last year to be too small. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future. Therefore, she has asked for more information about the financial advisability of discontinuing the housekeeping program The depreciation in housekeeping is for a van that transports housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. 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. Should the housekeeping program be discontinued? Explain. Show computations to support your answer. 2. Recast the above data in a format that would be more useful to management in assessing the long-run financial viability of the various services