Question: Microsoft Corporation is analyzing its software development costs using different costing methods: Requirements: Calculate the Standard Cost per software license: Direct Costs: $30 per license

Microsoft Corporation is analyzing its software development costs using different costing methods:

Requirements:

  • Calculate the Standard Cost per software license:
    • Direct Costs: $30 per license
    • Indirect Costs: $10 per license
  • Implement Marginal Cost Accounting to assess the cost impact of selling additional licenses.
  • Evaluate the benefits of Activity-Based Costing in allocating software support costs.
  • Discuss how each costing method influences pricing strategies and profitability in software sales.

Standard Cost Calculation:

Category

Amount per License ($)

Direct Costs

$30

Indirect Costs

$10

Total Standard Cost per License

$40

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