The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization’s finances and considers the net operating income of $34,600 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.)

Home Meals On Wheels House- Nursing 5928,000 $ 269.000 5 401,000 $ 258,000 119.000 Total keeping Revenues Varlable expenses 481,000 206,000 156.000 Contribution margin 447,000 150,000 195,000 102.000 Fixed expenses: Depreciation Llablity insurance Program administrators' salaries General administrative overnead 185,600 69,700 44 200 114,100 8,700 20,700 40,900 53,800 40,500 8,000 38,100 80.200 20,500 15,500 35,100 51,600 413,600 Total fxed expenses 124,100 166,800 122,700 Netoperating income (loss) 5 33,400 $ 25.900 $ 28,200 5 (20,700) "Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judih Miyama, Is concerned about the organization's finances and considers the netoperating income of533.400 last year to be razor-thin. (Last years results were very similar to the results for previous years and are representatve ofwhat would be expected in the future.) She feels that the organization should be bulding its financlal reserves ata more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Mlyama asked for more information about the financlal advisabity of perhaps discontinuing the housekeeping program. The depreclation in housekeeping is for a small van thatls used to carry the housekeepers and their equipmenttrom job to job. Ifane program were discontinued, the van would be donated to a charitable organizaton. None ofthe general administratve overhead would be avolded if the nousekeeping program were dropped, but the ilablity insurance and the salary ofthe program administrator would be avolded. Required: 1-a. Whatis the impacton netoperating income by discontinuing housekeeping program? (Decreases should be indicated by a minus sign.) Difference: Net Operating Totai if Current Total Housekeeping Income Increase Is Dropped or (Decrease) Revenues Variable expenses Contribution margin Fixed expenses: Depreciation Llability insurance Program administrators' salaries General administrative overhead Total fixed expenses Netoperating income (loss)