Answered step by step
Verified Expert Solution
Question
1 Approved Answer
State University Business School (SUBS) offers several degrees, including Bachelor of Business Administration (BBA). The new dean believes in using cost accounting information to
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. STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE Revenue Costs Degree Income Statement For the Academic Year Ending June 30 Advertising-BBA program Faculty salaries Degree operating costs (part-time staff) Building maintenance Classroom costs (building depreciation) Allocated school administration costs Total costs Net loss $ 6,000,000 225,000 3,060,000 390,000 555,000 1,275,000 645,000 $ 6,150,000 $ (150,000) Now the dean of the Business School is considering expanding the BBA program by offering an evening program in a nearby city. The new evening program would be the same size (in terms of students). The school's CFO estimates that the combined BBA revenue (on- campus plus the evening program) will be twice the current revenue. 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 $300,000 per academic year. School administration costs will increase by $30,000, and allocated school administration costs (for both programs) will be $780,000 per academic year. Required: a. Using the worksheet below, determine what will be the contribution of the combined BBA program given these estimates. b. Are there other factors the dean should consider before making a decision? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Using the worksheet below, determine what will be the contribution of the combined BBA program given these estimates.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started