State University Business School (SUBS) offers several degrees, including Bachelor of Business Administration (BBA). The new dean believes in using cost accounting information to make decisions and is reviewing a staff-developed income statement broken down by the degree offered. The dean is considering closing down the BBA program because the analysis, which follows, shows a loss. Tuition increases are not possible. The dean has asked for your advice. If the BBA degree program is dropped, school administration costs are not expected to change, but direct costs of the program, such as operating costs, building maintenance, and classroom costs, would be saved. There will be no other changes in the operations or costs of other programs.

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 isdropped?

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STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE Dogres Inoome Statement For the Aoademio Year Ending June 30 $400,000 Revenue Costs Advertising-BBA program Faculty salaries Degree operating costs (part-time staff) Building maintenance Classroom costs (building depreciation) Allocated school administration costs. " 15,000 204,000 26,000 37,000 85,000 43,000 $410,000 lotal costs. . Net loss. . $ (10,000)