13.60 - 13.60 (20 min) Drop a service: Melville College...

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13.60 (20 min) Drop a service: Melville College Keep Botany Drop Botany Net Outcome Program revenues $ 320,000 $ (195,000) $ 125,000 Program operating expenses Salaries 215, 000 (170,000) 45,000 Supplies 10, 000 (7,500) 2,500 Facility costs 175, 000 (55,000) 120,000 Total expenses 400, 000 (232,500) 167,500 Operating profit $ (80,000) $ 37,500 $ (42,500) a. If Melville drops the botany program, its reduced expenses will exceed its lost revenues by $37,500 annually (excluding the one-time $1,100 cost of moving equipment). On this criterion alone, the college should drop the botany program. However, the college will not avoid all of the loss left by the program, which will be ($42,500) b. Numerous other factors may be important to this decision. For example, if the program is dropped, careful consideration should be given to the academic implications of the decision such as a loss of accreditation. Dropping the program may have an impact on Melville’s reputation as a “quality” institution of higher learning. If the college drops botany, the
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This note was uploaded on 11/25/2010 for the course ACCT 33010 taught by Professor Staff during the Spring '08 term at Kent State.

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13.60 - 13.60 (20 min) Drop a service: Melville College...

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