13.60 (20 min) Drop a service: Melville College
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