Cumberland County Senior Services is a 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 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 non-profit organization devoted to providing essential services to reqular basis to check on their general health and to perform tests ordered by their physicians. Home Nursing $312,000 148,000 Meals on Wheels $480.000 260,000 House- Total $1,080,000 604,000 keeping $288,000 196,000 Revenues Variable expenses Contribution margin 476,000 164,000 220,000 92,000 Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead 43,000 9,000 41,000 96,000 75,600 49,400 128,000 216,000 9,600 23,000 45,000 62,400 23000 17,400 42.000 57,600 Total fixed expenses 469,000 140,000 189.000 140.000 Operating income (loss) $ 31,000 $ 7,000 24,000 $ (48.000) 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 $7,000 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.) 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 e feels at the organization should be building its financial reserves at a more rapid rate in 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 1-b. Should the housekeeping program be discontinued? Yes No Would a segmented income statement format be more useful to management in assessing the long- run financial viability of the various services? 2. Yes No