Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors home nursing, Meals on Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Home Meals On House- Total Nursing Wheels keeping 930.000 270.000 401.000 259.000 Revenues Variable expenses 464.000 117,000 95,000 52,000 Contribution margin 466,000 153.000 206.000 107.000 Fixed expenses: 20,500 8,400 40,800 Depreciation 69,700 Liability insurance 43,900 20,800 7.800 15,300 Program administrators' salaries 114.400 40,100 38,400 35,900 General administrative overhead 86,000 54,000 80,200 51.800 Total fixed expenses 414.000 123,300 167.200 123,500 Net operating income (loss) 52,000 29,700 38,800 (16,500) "Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization's finances and considers the net operating income of $52,000 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, Ms. Miyama asked for more information about the financial advisability of perhaps discontinuing the housekeeping program The depreciation in housekeeping 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. 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