Sunshine Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within Southern California. 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	$	922,000	$	264,000	$	401,000	$	257,000
Variable expenses		478,000		118,000		206,000		154,000
Contribution margin		444,000		146,000		195,000		103,000
Fixed expenses:
Depreciation		70,100		8,900		40,700		20,500
Liability insurance		43,000		20,100		7,500		15,400
Program administrators salaries		115,200		40,800		38,400		36,000
General administrative overhead*		184,400		52,800		80,200		51,400
Total fixed expenses		412,700		122,600		166,800		123,300
Net operating income (loss)	$	31,300	$	23,400	$	28,200	$	(20,300)

*Allocated on the basis of program revenues.

The head administrator of Sunshine Services, Patsy Pearsall, considers last years net operating income of $31,300 to be unsatisfactory; therefore, she 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?