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:

Total Home
Nursing Meals On Wheels House-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 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 $50,900 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:
1a.
What is the impact on net operating income by discontinuing housekeeping program? (Input the amount as apositive value.)

in net operating income by $

1b. Should the housekeeping program be discontinued?
Yes
No

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

Yes
No