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- Wheelskeeping $900,000 $260,000 $400,000 $240,000 490,000 120,000 210,000 160,000 Total Nursing Revenues Variable expenses Contribution margin Fixed expenses: 410,000 140,000 190,000 80,000 68,000 8,00040,000 20,000 42,000 20,000 7,000 15,000 Depreciation Liability insurance Program administrators' salaries115,000 40,00038,000 37,000 General administrative overhead 180,000 52,000 80,000 48,000 Total fixed expenses 405,000 120,000 165,000 120,000 Net operating income (loss) 5,000 20,000 $ 25,000 (40,000) 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 $5,000 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