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If you can answer 7, 8 and 9, you understand performance evaluation and cost allocation. 7. Regarding performance evaluation on me, I prefer less
If you can answer 7, 8 and 9, you understand performance evaluation and cost allocation. 7. Regarding performance evaluation on me, I prefer less amounts of cost allocation to me than more amounts. Am I right? 8. If the government pays me based on the cost-plus method (pay certain percent of the reported cost) for a certain project, I prefer less amount of cost allocated to the project than more amounts. Am I right? 9. Moderna Medical is doing the following two research projects: A: Performing a research to develop a new testing kit manufacturing process. This process will be sold in the medical technology market at the market price (to be determined by the demand and supply). B: Cot reimbursement contract. The National Health Foundation (NHF) and Morderna had an agreement. Morderna a mental health research and it will be reimbursed 150% of the reported costs (direct and indirect) incurred in the project. For each project, Moderna incurred both direct and indirect costs. Indirect costs are allocated using a base chosen by Moderna. Mordena incurred a total of $10,000,000 indirect costs. There are three potential bases of indict cost allocation, LEH, NCU and NRW. The following information is also given: Project Direct costs Lab experimental A $5,000,000 B $8,000,000 time in hours (LEH) 2,000 3,000 Number of computers used (NCU) Number of researchers worked (NRW) 120 700 120 300 Required: To maximize its monetary benefit, Morderna has an incentive to choose which one as the allocation bases? No computations necessary. Just provide reasoning.
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