Question 7 Relevant Costs Suggested time 15 minutes 5 Marks Home School Help Services is a non-profit organization devoted to providing home-schooling services for parents who are trying to educate their children whilst also working from home. Three services are provided for parents-Home Tidying, Meal Prep, and Child Tutoring. Data on revenue and expenses for the past year follow: Total $1.080.000 604.000 Homo $312.000 148.000 Meals $480.000 200.000 Tutor $288.000 195.000 Variable expenses Contribution margin 476.000 164,000 220.000 92.000 Fixed expenses Depreciation Liability insurance Program administrators' salanes General administrative overhead 75.000 49.400 2300 9600 23000 45 000 52.400 43,000 9000 41.000 17.400 42.000 57 800 216.000 95.000 Totalfixed expenses 469 000 140,000 189000 1 40 000 Operating income (loss) $ 7000 $ 24.000 $ 31,000 $(48,000) "Allocated on the basis of program revenue The head administrator of HomeSchoolHelp. Janice Tracy, is concerned about the organization's finances as it does not seem to be generating much income for its reserves After seeing the above report, Tracy believes it may be a good idea to discontinue the tutoring program The depreciation in the Tutoring category is for a large refrigerated truck which carries ice cream that tutors use to bribe children into doing schoolwork. If the program were discontinued, the truck would be donated to a charitable organization. Depreciation charges assume Zero salvage value. None of the general administrative overhead would be avoided if the Tutoring program were dropped, but the liability insurance and the salary of the program administrator would be avoided. Required Compute the change in net operating income for the company as a whole if the Child Tutoring program be discontinued