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: Home Meals on Total Nursing Wheels. Fixed expenses: Depreciation Revenues Variable expenses Contribution margin Liability insurance $1,017,000 $293,800 $452,000 House- keeping $271,200 564,100 138,200 242,500 183,400 452,900 155,600 209,500 87,800 72,940 9,040 41,950 21,950 46,810 21,950 8,300 16,560 Program administrators' salaries 123,450 43,250 39,950 40,250 203,400 58,760 90,400 54,240 446,600 133,000 180,600 133,000 6,300 $ 22,600 $ 28,900 $(45,200) General administrative overhead 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 $6,300 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 < Prev 9 of 9 Next >