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: Meals On House- keeping $919,000 $262,000 $402,000 $255,000 Home Total Nursing Wheels Revenues Variable 464,000 117,000 196,000 151,000 expenses Contribution margin 455,000 145,000 206,000 104,000 Fixed expenses Depreciation 69,000 43,800 20,200 8,200 40,500 20,300 7,90015,700 Liability insurance Program administrators 114,60040,100 39,000 35,500 salaries General administrative 183,800 52,400 80,400 51,000 overhead* Total fixed expenses 120,900 167,800 122,500 Net operating income (loss) $ 43,800 24,100 $ 38,200 $ (18,500) 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 $43,800 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, 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