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2-25 Using unit costs for making decisions Rhonda Heninger is a well known software engineer. Her specialty is writing software code used in maintaining the

2-25

Using unit costs for making decisions

Rhonda Heninger is a well known software engineer. Her specialty is writing software code used in maintaining the security of credit card information. Heninger is approached by the Electronic Commerce Group (ECG). It offers to pay her $120 000 for the right to use her code under licence in its eprocurement software package. Heninger rejects this offer because it provides her with no additional benefits if the eprocurement package is a runaway success. Both parties eventually agree to a contract in which ECG pays Heninger a flat fee of 4120 000 for the right to use her code in up to 10 000 packages. If eprocurement sells more than 10 000 packages, Heninger received 49.60 for each package sold beyond the 10 000 level

  1. What is the unit cost of ECG for Heninger software code included in its eprocurement package if ti sells 2000, 6000, 10000, 20000 packages? Comment results
  2. For prediction fo ECG total cost of using Heninger software code in eprocurement which unit cost of a to a in requirement 1 would you recommend ECG use?

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