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- Total Nursing Wheels keeping $ 919,000 $ 265,000 $ 401,000 $ 253,000 479,000 116,000 203,000 160,000 440,000 149,000 198,000 93,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Net operating income (loss) 68,900 8,500 40,300 20,100 44,200 20,800 7,600 15,800 114,300 40,800 38,500 35,000 183,800 53,000 80, 200 50, 600 411,200 123, 100 166,600 121,500 $ 28,800 $ 25,900 $ 31,400 $ (28,500) *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 $28,800 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? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Req 2B Should the Housekeeping program be discontinued? Yes 10 No Reg 1A Reg 1B Reg 2A Reg 2B 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) Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Reg 2B Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services? Yes ONO