A social welfare agency has a government budget appropriation for 20X7 of $900,000. The agency’s major mission is to help disabled persons who are unable to hold jobs. On the average, the agency supplements each person’s income by $5,000 annually. The agency’s fixed costs are $280,000. There are no other costs.
1. How many disabled persons were helped during 20X7?
2. For 20X8, the agency’s budget appropriation has been reduced by 15%. If the agency continues the same level of monetary support per person, how many disabled persons will be helped in 20X8? Compute the percentage decline in the number of persons helped.
3. Assume a budget reduction of 15%, as in requirement 2. The manager of the agency has discretion as to how much to supplement each disabled person’s income. She does not want to reduce the number of persons served. On average, what is the amount of the supplement that can be given to each person? Compute the percentage decline in the annual supplement.