Question: Microsoft Corporation operates software development centers globally. In June 2030, the company incurs the following operating costs related to its software development: Development Center Rent:

Microsoft Corporation operates software development centers globally. In June 2030, the company incurs the following operating costs related to its software development:

Development Center Rent: $30 million
Software Development Labor: $50 million
Research Materials: $15 million
User Support Costs: $12 million
Administration Overhead: $18 million

Labor costs are split between direct ($40 million) and indirect ($10 million).

Required:

Calculate the total operating costs for Microsoft Corporation.
Allocate administration overhead to the software development centers.
Determine the cost per software license sold assuming 5 million licenses.
Analyze the cost behavior of administration overhead in software development.
Prepare an operating costing statement for Microsoft Corporation.

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