The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organizations finances and considers the net operating income of $33,400 last year to be razor-thin. (Last year's results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more information about the financial advisability of perhaps 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 impact on net operating income by discontinuing housekeeping program? (Decreases should be indicated by a minus sign.)

Total Nursing eels keeping Revenues $928.000 269.000 401.000 258.000 Variable expenses 481.000 9.000 206.000 56.000 Contribution margin 447.000 50.000 95.000 02.000 Fixed expenses: Depreciation 69,700 8,700 40,500 20,500 Llablity Insurance 44.200 20,700 8.000 5.500 Program administrators salaries 4,100 40,900 38,100 35,100 General administrative overh ead 85,600 53.800 80,200 51.00 413,600 24.100 66.800 122.700 Total fxed expenses et operating Income (loss) 33,400 25,900 28.200 (20,700 Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Mlyama,ls concerned about the organization's finances and considers the n et operating Income of$33.400 last year to be razor-thin ast years results were very similar to the results for previous years and are representatve ofwhat would b e expected In the future.) She feels thatthe organizaton should be bullding Its financial reserves at a more rapid rate In order to prepare for the next Ineviable recession. Aner seeing the above report, Ms. Mlyama asked for more informaton aboutthe financial advisablit of perhaps discontinuing the housekeeping program. The depreciation in housekeeping ls for a small van thi ls u sed to ca rry the housekeepers and thelr equipment from job to job. Mthe program were discontinued, the van would be donated to a charitable organizaton. None ofthe general administratve overh ead would be avolded if the housekeeping program were dropped, but he lability Insurance and the salary ofthe program administrator would be avolded Required Is the impact on n et operating Income by discontinuing housekeeping program (Decreases should be Indicated by a minus sign.) Current Total Housekeeping income increase or (Decrease) Revenues Con trouton margin Fixed expenses: De precato insurance Program administrators salaries Total txed expenses