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 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	$	990,000		$	286,000		$	440,000		$	264,000
Variable expenses		547,000			134,000			235,000			178,000
Contribution margin		443,000			152,000			205,000			86,000
Fixed expenses:
Depreciation		71,800			8,800			41,500			21,500
Liability insurance		45,700			21,500			8,000			16,200
Program administrators salaries		121,500			42,500			39,500			39,500
General administrative overhead*		198,000			57,200			88,000			52,800
Total fixed expenses		437,000			130,000			177,000			130,000
Operating income (loss)	$	6,000		$	22,000		$	28,000		$	(44,000	)

*Allocated on the basis of program revenues.

The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organizations finances and considers the operating income of $6,000 last year to be razor-thin. (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, Ewa asked for more information about the financial advisability of discontinuing the