Assignment 1 send 29 09 2014
Assignment-1 Cost Concept-29-09-2014
Question 1: Cost drivers and functions: The list of representative cost drivers in the right column below are randomized with respect to the list of functions in the left column. That is, they do not match.
Function
Representative Cost Driver
1.
2.
3.
4.
A. Number of invoices sent
B. Number of purchase orders
C. Number of Research scientists
D. Hours of computer processing unit (CPU)
E. Number of new hires
F. Number of transaction processed
Accounting
Personnel
Data processing
Research and Development
5. Purchasing
6. Billing
1. Match each function with its representative cost driver.
2. Give a second example of a cost driver for each function.
Question 2: Total costs and unit costs: Ms. Thomas is a well-known software engineer. Her specialty is writing software code used in maintaining the security of credit card information. Thomas is approached by the Electronic Commerce Group (ECG). It offers to pay her Rs. 1, 00,000 for the right to use her code under license in their e.procurement software package. Thomas rejects these offers because it provides her with no upside if the e.procurement package in a runway success. Both parties eventually agree to a contact in which ECG pays Thomas a flat fee of Rs. 1, 00,000 for the right to use her code in up to 10,000 packages. If e.procurement sells more than 10,000 packages,
Thomas receives an additional Rs 8 for each package sold beyond the 10,000 level.
1. What is the unit cost to ECG of Thomas software code included in its e.procurement package if it sells (a) 2,000 packages, (b) 6,000 packages, (c) 10,000 packages, and (d) 20,000 packages?
Comment on the results.
2. To predict ECG’s total cost of using Thomas software code in e.procurement, which unit cost (if any) of (a) to (d) in requirement 1 would you recommend ECG use? Explain.
Question 3: Finding unknown amounts: An author for the Internal Revenue Service is trying to reconstruct some partially destroyed records of
Question 1: Cost drivers and functions: The list of representative cost drivers in the right column below are randomized with respect to the list of functions in the left column. That is, they do not match.
Function
Representative Cost Driver
1.
2.
3.
4.
A. Number of invoices sent
B. Number of purchase orders
C. Number of Research scientists
D. Hours of computer processing unit (CPU)
E. Number of new hires
F. Number of transaction processed
Accounting
Personnel
Data processing
Research and Development
5. Purchasing
6. Billing
1. Match each function with its representative cost driver.
2. Give a second example of a cost driver for each function.
Question 2: Total costs and unit costs: Ms. Thomas is a well-known software engineer. Her specialty is writing software code used in maintaining the security of credit card information. Thomas is approached by the Electronic Commerce Group (ECG). It offers to pay her Rs. 1, 00,000 for the right to use her code under license in their e.procurement software package. Thomas rejects these offers because it provides her with no upside if the e.procurement package in a runway success. Both parties eventually agree to a contact in which ECG pays Thomas a flat fee of Rs. 1, 00,000 for the right to use her code in up to 10,000 packages. If e.procurement sells more than 10,000 packages,
Thomas receives an additional Rs 8 for each package sold beyond the 10,000 level.
1. What is the unit cost to ECG of Thomas software code included in its e.procurement package if it sells (a) 2,000 packages, (b) 6,000 packages, (c) 10,000 packages, and (d) 20,000 packages?
Comment on the results.
2. To predict ECG’s total cost of using Thomas software code in e.procurement, which unit cost (if any) of (a) to (d) in requirement 1 would you recommend ECG use? Explain.
Question 3: Finding unknown amounts: An author for the Internal Revenue Service is trying to reconstruct some partially destroyed records of