Melville College is a small liberal arts school located in Massachusetts. It is evaluating its botany program because the program’s tuition revenues and costs recently produced an $80,000 loss, which is typical of performance in the past few years. Tuition revenues earned totaled $320,000; operating expenses were faculty salaries, $215,000; supplies, $10,000; and other facility costs, $175,000. If the program is dropped, the following are expected:

Some students will change majors, but overall college enrollment will decline as other students transfer to other universities. Total lost tuition revenue is estimated at $195,000.

Untenured faculty members with combined salaries of $170,000 can be dismissed. The tenured faculty will transfer to the biology department. In addition, 75 percent of the program’s supplies cost can be saved.

Other facility costs include $98,000 of general college overhead costs that are assigned to the program and $77,000 of salaries earned by office and support personnel. One of these employees

(annual salary, $22,000) will be transferred to the music school; other employees can be laid off.