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 Meals On House- keeping $922,000 263,000 $ 400,000 $ 259,000 154,000 105,000 Home Total Nursing Wheels Revenues Variable expenses Contribution margin Fixed expenses: 465,000 117,000 194,000 457,000 146,000 206,000 Depreciation Liability insurance Program administrators' salaries General administrative overhead* 40,300 7,200 38,700 80,000 413,400 123,200 166,200 70,100 43,000 115,900 184,400 20,800 15,100 36,300 51,800 124,000 22,800 $ 39,800 $ (19,000) 9,000 20,700 40,900 52,600 Total fixed expenses Net operating income (loss) $ 43,600 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 $43,600 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