Activity-Based Costing (ABC) at Microsoft

• Values:
  • Total Overhead Costs: $15,000,000
  • Cost Driver Units: 300,000
  • Number of Activities: 6
  • Activity Cost Pools: Product Development, Customer Support

• Requirements:
  1. Allocate overhead costs using the ABC method for Microsoft.
  2. Compare the cost allocation results of ABC with traditional costing.
  3. Discuss the benefits of ABC in the software industry.
  4. Recommend improvements in cost allocation practices at Microsoft.