State University Business School (SUBS) offers several degrees, including Bachelor of Business Administration (BBA).

STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE Degree Income Statement For the Academic Year Ending June 30

Revenue $ 2,000,000

Costs

AdvertisingBBA program 75,000

Faculty salaries 1,020,000

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)

The dean of the Business School is considering expanding the BBA program by offering an evening program in a nearby city. The program would be the same size (in terms of students). The schools CFO estimates that the combined BBA revenue (on-campus plus the evening program) will be twice the current revenue, as shown in the above table. Because the evening program will be new, advertising expenses for the evening session will be three times their current level. Faculty salaries will double. Degree operating costs will increase by 50 percent. Building maintenance and classroom costs will remain unchanged, but classroom space will be rented at a cost of $100,000 per academic year. School administration costs will increase by $10,000, and allocated school administration costs (for both programs) will be $260,000 per academic year. Required: a. What will be the contribution of the combined BBA program be given these estimates?

STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE Differential Revenues and Costs, BBA Programs For the Academic Year Ending June 30
Revenue	$
Costs
AdvertisingBBA program
Faculty salaries
Degree operating costs (part-time staff)
Building maintenance
Classroom costs Classroom rental
Differential school administration costs
Total costs	$
Net contribution from the BBA programs	$