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	$	929,000	$	270,000	$	405,000	$	254,000
Variable expenses		482,000		120,000		207,000		155,000
Contribution margin		447,000		150,000		198,000		99,000
Fixed expenses:
Depreciation		69,300		8,300		40,200		20,800
Liability insurance		43,700		20,800		7,300		15,600
Program administrators salaries		114,800		40,200		38,700		35,900
General administrative overhead*		185,800		54,000		81,000		50,800
Total fixed expenses		413,600		123,300		167,200		123,100
Net operating income (loss)	$	33,400	$	26,700	$	30,800	$	(24,100)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $33,400 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?

Prepare a properly formatted segmented income statement. Meals On House- Home Nursing Total Wheels keeping Revenues Variable expenses Contribution margin Traceable fixed expenses: Depreciation Liability insurance Program administrators' salaries Total traceable fixed expenses Program segment margins General administrative overhead Net operating income (loss)