Question: K Udell Software develops and markets computer software for the agriculture industry. Because support costs are a large portion of the cost of software

Because support costs are a large portion of the cost of software

K Udell Software develops and markets computer software for the agriculture industry. Because support costs are a large portion of the cost of software development, the director of cost operations of Udell, Dixie Kennedy, is especially concerned with understanding the effects of support cost behavior. Kennedy has completed a preliminary activity analysis of one of Udell's primary software products: FertiMix (software to manage fertilizer mixing). This product is a software template that is customized for specific customers, who are charged for the basic product plus customizing costs. The activity analysis is based on the number of customized lines of FertiMix code. Currently, support cost estimates are based on a fixed rate of 65% of the basic cost. Data are shown for two recent customers: (Click the icon to view the data.) Requirements 1. Compute the support cost of customizing FertiMix for each customer using each cost-estimating approach. 2. If the activity analysis is reliable, what are the pros and cons of adopting it for all Udell's software products? Requirement 1. Compute the support cost of customizing FertiMix for each customer using each cost-estimating approach. Cost driver Percent of basic cost Lines of customized code. Support Costs Allocated Sunshine Plants Night Blooms analysis of one of Udell's primary software products: FertiMix (software to manage fertilizer mixing). This pm ct plus cus Xy, supports omers: 8 Data table Customer ting appro Sunshine Plants Night Blooms vare produ 10 Basic cost of FertiMix 16,000 $ 16,000 Lines of customized code 520 190 Estimated cost per line of customized code $ 24 $ 24 cost-estim 11 6 12 Print Done

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