Chapter 11, Problem 19P

Dropping or Retaining a Segment
Jackson Count Senior Services is a nonprofit organization devoted to providing essential services to seniors who lie in their own homes within the Jackson Count ea Three services e provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow.

The head administrator of Jackson County Senior Seniors, Judith Miyama, considers last sears net operating income of $5,000 to be unsatisfactory therefore, she is considering the possibility of discontinuing the housekeeping program.
The depreciation in housekeeping is for a small in 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. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program Should the Housekeeping program be discontinued Explain.
2. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run financial viability of its various services.