Moonlight Company is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within Utah. Three services are provided for seniorshome nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

		Total		Home Nursing		Meals On Wheels		House- keeping
Revenues	$	917,000	$	263,000	$	404,000	$	250,000
Variable expenses		461,000		116,000		192,000		153,000
Contribution margin		456,000		147,000		212,000		97,000
Fixed expenses:
Depreciation		69,600		8,800		40,400		20,400
Liability insurance		43,500		20,300		7,500		15,700
Program administrators salaries		114,000		40,800		38,000		35,200
General administrative overhead*		183,400		52,600		80,800		50,000
Total fixed expenses		410,500		122,500		166,700		121,300
Net operating income (loss)	$	45,500	$	24,500	$	45,300	$	(24,300)

*Allocated on the basis of program revenues.

The head administrator of Moonlight Company, Peter McCain, considers last years net operating income of $45,500 to be unsatisfactory; therefore, He is considering the possibility of 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.

Required:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Based on the financial advantage (disadvantage) of discontinuing the Housekeeping program calculated in requirement Req 1A, should the Housekeeping program be discontinued?