A social welfare agency has a government budget appropriation for 2006 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 other income by $5,000 annually. The agency’s fixed costs are $290,000.
There are no other costs.
1. How many people are helped during 2006?
2. For 2007, the agency’s budget appropriation has been reduced by 15 percent. If the agency continues the same level of monetary support per person, how many people will be helped in 2007? Compute the percentage decline in the number of persons helped.
3. Assume a budget reduction of 15 percent, as in requirement 2. The manager of the agency has discretion as to how much to supplement each person’s income. She does not want to reduce the number of people served. On the average, what is the amount of the supplement
that can be given to each person? Compute the percentage decline in the annual supplement.