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Sunshine Services is a nonprofit organization devoted to providing essential services to seniors who live in their own hom within Southern California. Three services are

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Sunshine Services is a nonprofit organization devoted to providing essential services to seniors who live in their own hom within Southern California. Three services are provided for seniors-home nursing, Meals On Wheels, and housekeeping. Data revenue and expenses for the past year follow: Home Meals On House- Total Nursing Wheels keeping $ 934,000 $ 268,000 $ 409,000 $257,000 482,000 115,000 210,000 157,000 452,000 153,000 199,000 100,000 Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Liability insurance Program administrators' salaries General administrative overhead Total fixed expenses Net operating income (loss) 1:17:25 68,900 8,200 40,400 20,300 44,200 20,500 7,800 15,900 114,600 41,000 38,500 35,100 186,800 53,600 81,800 51,400 414,500 123, 300 168,500 122,700 $ 37,500 $ 29,700 $ 30,500 $(22,700) *Allocated on the basis of program revenues. The head administrator of Sunshine Services, Patsy Pearsall, considers last year's net operating income of $37,500 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

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