958 Cumberland County Senior Services is a non-profit organization devoted to providing essential services to seniors who live in their own homes within the Cumberland County area. Three services are provided for seniors-home 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: Revenues Variable expenses Contribution margin Home Meals on House- Total Nursing Wheels keeping $981,000 $283,400 $436,000 $261,600 541,300 132,600 232,500 176,200 439,700 150,800 203,500 85,400 Fixed expenses: Depreciation 71,420 8,720 41,350 21,350 Liability insurance 45,330 21,350 7,900 16,080 Program administrators' salaries 120,850 42,250 39.350 39,250 General administrative overhead. 196,200 56,688 87,200 52,320 433,800 129,000 175,800 129,000 $ 5,900 $ 21,800 $ 27,700 $(43,600) Total fixed expenses Operating income (loss) "Allocated on the basis of program revenues. The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $5,900 last year to be razor-thin. (Last year's 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, Ewa asked for more information about the financial advisability of discontinuing the housekeeping program. The depreciation in the housekeeping category 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: 1-a. Compute the change in net operating income for the company as a whole if housekeeping program be discontinued. in net operating income by