ACC403 Mod 5 Case SLP - Essay Example

The organization that is chosen for study is Microsoft. Microsoft is a global leader in system software and application software. The company is the leader in creating and providing of desktop, laptop, handheld and mobile operating system, network operating system as well as application software like .net, Visual suite of products etc. It is also a leader in providing office productivity software like Word, Excel, Power Point and personal database – Access. It is also a leader in internet access software – internet explorer and its mail clients – Outlook and Outlook express are most sought after mail access clients.

There is no actual data that is available in public domain and hence the figures presented here are only to highlight the learning assimilation that has happened and do not reflect actualness or claim any authenticity.The activity and activity drivers identified are:ActivityActivity DriversDesigning of softwareDesign ChangesOrderingNumber of ordersPackagingMachine timeMarketing Number of customer agreementsThe company uses the actual costs and activity rates which are shown below:(All figures in USD)Activity DriverCosts of ActivityTotal Driver UsageApplication RateDesign Changes1,225,00012,250 changes100/changeNo.

of Orders325,0006,500 orders50/OrderMachine time3,050,0001,525 hours2000/hourNo. of agreements1,400,0007,000 agreements200/agreementApplication rates are then multiplied by the cost driver usage for each product to determine the cost to be applied to each product:ProductActivityApplication RateDriver UsageCostMS-OfficeDesigning of software100/change225 changes22,500Ordering50/Order150 orders7,500Packaging2000/hour100 hours200,000Marketing 200/agreement200 agreements40,000Total overhead costs to be applied to each standard MS-Office package: 270,000.

00MS-Office ProfessionalDesigning of software100/change1000 changes100,000Ordering50/Order500 orders25,000Packaging2000/hour52.5 hours105,000Marketing 200/agreement500 agreements100,000Total overhead costs to be applied to each standard MS-Office professional package:330,000.00Bibliography1. The ICFAI University Press. (2004). Introduction to Management Accounting. Hyderabad: The ICFAI University Press.2. Value based Management.net. (2008, March 25). Activity Based Costing Method ABC Methodology.

Retrieved July 15, 2008, from Value based Management.net: http://www.valuebasedmanagement.net/methods_abc.html