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	$	925,000	$	265,000	$	405,000	$	255,000
Variable expenses		477,000		114,000		203,000		160,000
Contribution margin		448,000		151,000		202,000		95,000
Fixed expenses:
Depreciation		70,500		8,800		40,800		20,900
Liability insurance		43,400		20,900		7,100		15,400
Program administrators salaries		115,200		41,000		38,300		35,900
General administrative overhead*		185,000		53,000		81,000		51,000
Total fixed expenses		414,100		123,700		167,200		123,200
Net operating income (loss)	$	33,900	$	27,300	$	34,800	$	(28,200)

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last years net operating income of $33,900 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.

	Total	Home Nursing	Meals On Wheels	House-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)

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?