State University Business School (SUBS) offers several degrees, including Bachelor of Business Administration (BBA). The new dean
Question:
STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
For the Academic Year Ending June 30
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000,000
Costs
Advertising—BBA program . . . . . . . . . . . . . . . . . 75,000
Faculty salaries . . . . . . . . . . . . . . . . . . . . . . . . . . 1020,000
Degree operating costs (part-time staff) . . . . . . . 130,000
Building maintenance . . . . . . . . . . . . . . . . . . . . . 185,000
Classroom costs (building depreciation) . . . . . . . 425,000
Allocated school administration costs . . . . . . . . . 215,000
Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,050,000
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (50,000)
Required
What revenues and costs are probably differential for the decision to drop the BBA program? What will be the net effect on the SUBS contribution (profit) if the BBA program is dropped?
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Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0078025525
4th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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