Microsoft Corporation is analyzing its COGS for the current software development cycle:

Requirements:

• Calculate the COGS for software development using the formula: COGS = Software Engineering Costs + Allocated IT Costs + Administrative Overhead.
• Present a detailed COGS table with the following values:
  • Software Engineering Costs: $8,000,000
  • Allocated IT Costs: $2,000,000
  • Administrative Overhead: $1,000,000

• Recommend strategies to reduce COGS by 20% through process optimizations.
• Justify how reducing COGS aligns with Lean software development principles.
• Illustrate the financial impact on Microsoft's income statement and balance sheet with projected savings.

COGS Table:

Category	Amount ($)
Software Engineering Costs	$8,000,000
Allocated IT Infrastructure	$2,000,000
Administrative Overhead	$1,000,000
Total COGS	$11,000,000