Question: Microsoft Corporation operates software services using operating costing. In June 2031, the company incurs the following operating costs: Development Center Rent: $30 million Software Development

Microsoft Corporation operates software services using operating costing. In June 2031, the company incurs the following operating costs:

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

Required:

  • Classify each cost as fixed, variable, or semi-variable.
  • Analyze the cost behavior of operating costs in software development.
  • Determine the cost per software license sold assuming 5 million licenses.
  • Discuss strategies to manage variable costs in operating costing.
  • Prepare an operating costing statement for Microsoft Corporation.

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