Senior Services is a non-profit organization devoted to providing essential services to wors who live in their own homes. The Vices we provided for in-Home Nursing Meals on Wheels and Housekeeping. Data on revenue and expenses for the past year follow Total Revenues Home Nursing Meals on Wheels Housekeeping $920,000 $260.000 $400.000 $260.000 Variable expenses 490,000 120.000 210.000 100,000 Fored expenses Depreciation 68,000 8.000 40.000 20,000 Liability Insurance 57.000 20.000 7.000 30,000 Program administrators' salaries 118,000 40.000 38,000 40.000 General administrative overhead 180.000 51.000 78,000 51.000 Total fixed expenses 423,000 119,000 163,000 141.000 Net operating income (5) $7,000 $2,000 327.000 S1000 * Allocated on the basis of program revenues The head administrator considers last year's net operating income of $7,000 to be unsatisfactory, therefore, consideration is being given to the post 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 jobs. 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 Only two thirds of the ability insurance would be avoided due to the need for run-off cover in case of negligence or loss claints resulting from services provided whilst Housekeeping was previously operating. All of the salary of the program administrator would be avoided. Required: What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? Should the Housekeeping program be discontinued? Explain