Business, 06.08.2019 19:10 punkinrichard1oxon2i

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 eveningsession 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 $125,000 per academic year. school administration costs will increase by $15,000, and allocated school administration costs (for both programs) will be $285,000 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 her decision? ans. sufficient applicants and facultyexplanation: this differential analysis shows that the combined contribution of the bba program is positive. revenue: $2,050,000 × 2 = $4,100,000costs: advertising – bba program: $80,000 + ($80,000 × 3 ) = $320,000faculty salaries: $1,045,000 × 2 = $2,090,000degree operating costs: $155,000 × 1.5 = $232,500

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