Question

State Untversity Business School (SUBS) offers several degrees, Includina Bachelor of Business AdministraionBBA) The new dean beleves in using cost accounting infonmation to make decisions and Is rewiewIna a staff-developed Income statement broken down by the degree offened т с d an is co sido ng Closing down the BBA p c am bo us the ana ysis which to ws shows IOG5. Tumon inc cascs are not pos blC The do an has asko or your advic the BBA d groc p ra is dropp d school adminis ration costs a c not co o cd to change but drcc SIAIE UNVERSITY BUSNESS SCHOOUL BBA DE For the Acadeic Ye Enningure 30 S 390,000 Costs Faalty aalaris Builcing mantenance Clasaroom coss (buildng deprediation Alocatad 28,000 31,000 0,000 school administration cnsts Total coct Required: ฮ. Using tho workshoot boor, dctcrminc which revcnucs and costs arc probably differential for the decision to drop tho BBA program. ATE UNIVER USINESS Degree Income Statement Differential Revenues and Costs For the Academk Ycar June 30 Revenuc Cort Aerising-BIA program Facutylaries Llagnee oparaing coats Hulding malmananca Classmom ccats b. VWhat all he thve net etect can the sJHS cntnbuton rotr it thee HHA program is drcappext will

Answer 1

a
STATE UNIVERSITY BUSINESS SCHOOL, BBA DEGREE
Degree Income Statement
Differential Revenues and Costs
For the Academic Year Ending June 30
Revenue	390000	Differential
Costs:
Advertising—BBA program	25000	Differential
Faculty salaries	195000	Differential
Degree operating costs	28000	Differential
Building maintenance	31000	Differential
Classroom costs	70000	Differential
Allocated school administration costs	0	Not Differential
Total costs	349000
Net differential gain from BBA program	41000
b
SUBS contribution (profit) will decrease by $41000