What is the impact on net operating income by discontinuing housekeeping program?

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. In the home nursing program nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals On Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow:
Total
Home Nursing
Meals On Wheels
House
keeping
Revenues
$
900000
$
260000
$
400000
$
240000
Variable expenses
490000
120000
210000
160000
Contribution margin
410000
140000
190000
80000
Fixed expenses:
Depreciation
68000
8000
40000
20000
Liability insurance
42000
20000
7000
15000
Program administrators salaries
115000
40000
38000
37000
General administrative overhead*
180000
52000
80000
48000
Total fixed expenses
405000
120000
165000
120000
Net operating income (loss)
$
5000
$
20000
$
25000
$
(40000)
*Allocated on the basis of program revenues.
The head administrator of Jackson County Senior Services Judith Miyama is concerned about the organizations finances and considers the net operating income of $5000 last year to be too small. (Last years results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report Ms. Miyama asked for more information about the financial advisability 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. 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. Omit the $ sign in your response.)
Decrease in net operating income by
$
1b.
Should the housekeeping program be discontinued?
2.
Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services.