Cost Accounting

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 STATE UNIVERSITY BUSINESS SCHOOL, BLA DEGREE Decree Income Statement For the Academic Year Endin June 30 Revenue 435,000 Costs Advertising A programe 16.00 Faculty salaries 100,000 Degree operating costs (part-time staff) 30,000 Building maintenance Classroon costs (building depreciation) 105,000 Allocated school administration costs 78.000 447,500 (12,500) $ 38,500 Total costs Net loss $ $ STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE Degree Income Statement Differential Revenues and Costs For the Academic Year Ending June 30 Revenue Costs Advertising - BBA program Faculty salaries Degree operating costs Building maintenance Classroom costs Allocated school administration costs Total costs 0 A Retired A Required B > Complete this question by entering your answers in the tabs below. Required A Required B What will be the net effect on the SUBS contribution (profit) if the BBA program is dropped? SUBS contribution (profit) will