Adams County Area on Aging is a nonprofit organization that helps its senior residents live in their
Question:
Adams County Area on Aging is a nonprofit organization that helps its senior residents live in their own homes by providing three essential services. These services are home health care, meal delivery and housekeeping. In the home health care program, trained aides visit seniors on a regular basis to provide companionship, meal preparation, and some health care. The meal delivery program provides daily delivery of a hot meal. The housekeeping service provides weekly housecleaning services. Data on revenue and expenses for the past year is shown below: The director of the Adams County Area on Aging is concerned about the organizations finances. Last years results were similar to the results for previous years and are representative of what would be expected in the future. The director believes the net operating income of $5,000 last year is too small for the organization to be sustainable in the face of anticipated rising costs and an upcoming recession. The director has asked for more information about the financial advisability 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 chartable organization. Depreciation charges assume zero residual value. The liability insurance and the salary of the program administrator would be avoided if the housekeeping program were dropped, however, the general administrative overhead would not be avoided.
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