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 Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Operating income (loss) Total $900,000 490,000 Home Nursing $260,000 Meals on Wheels Housekeeping $400,000 $240,000 120,000 210,000 160,000 410,000 140,000 190,000 80,000 68,000 8,000 40,000 20,000 42,000 20,000 7,000 15,000 115,000 40,000 38,000 37,000 180,000 52,000 80,000 48,000 405,000 120,000 165,000 120,000 $ 5,000 $ 20,000 $ 25,000 $(40,000) *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 $5,000 last year to be razor-thin. (Last year's results were very similar to the results for previous 9 - Chapter 126 Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead* Total fixed expenses Operating income (loss) Allocated on the basis of program revenues. Saved 490,000 120,000 210,000 160,000 410,000 140,000 190,000 80,000 68,000 8,000 40,000 20,000 42,000 20,000 7,000 15,000 115,000 40,000 38,000 37,000 180,000 52,000 80,000 48,000 405,000 120,000 165,000 120,000 $ 5,000 $ 20,000 $ 25,000 $(40,000) Help Save & Exit The head administrator of Cumberland County Senior Services, Judith Ewa, is concerned about the organization's finances and considers the operating income of $5,000 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. Check m