FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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 If e. procurement sells more than 10,000 packages, Wang receives an additional $8 for each package sold beyond the 10,000 level. Q.1. What is the unit cost to ECG of Wang’s 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. Q.2. To predict ECG’s total cost of using Wang’s software code in e.procurement, which unit cost (if any) of (a) to (d) in requirement one would you recommend ECG use? Explain.

Total Costs and unit costs. Susan Wang is a well-known software
engineer. Her specialty is writing software code used to maintain credit-
card information security. Wang is approached by the Electronic
Commerce Group (ECG). They offer to pay her $ 100,000 for the right to
use her code under license in their e. procurement software package.
Wang rejects this offer because it gives her no upside if the e.
procurement package is a runaway success. Both parties eventually
agree to a contract in which ECG pays Wang a flat fee of $100,000 for the
right to use the code in up to 10,000 packages. If e. procurement sells
more than 10,000 packages, Wang receives an additional $8 for each
package sold beyond the 10,000 level. Q.1. What is the unit cost to ECG
of Wang's 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. Q.2. To predict ECG's total
cost of using Wang's software code in e. procurement, which unit cost (if
any) of (a) to (d) in requirement one would you recommend ECG use?
Explain.
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Transcribed Image Text:Total Costs and unit costs. Susan Wang is a well-known software engineer. Her specialty is writing software code used to maintain credit- card information security. Wang is approached by the Electronic Commerce Group (ECG). They offer to pay her $ 100,000 for the right to use her code under license in their e. procurement software package. Wang rejects this offer because it gives her no upside if the e. procurement package is a runaway success. Both parties eventually agree to a contract in which ECG pays Wang a flat fee of $100,000 for the right to use the code in up to 10,000 packages. If e. procurement sells more than 10,000 packages, Wang receives an additional $8 for each package sold beyond the 10,000 level. Q.1. What is the unit cost to ECG of Wang's 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. Q.2. To predict ECG's total cost of using Wang's software code in e. procurement, which unit cost (if any) of (a) to (d) in requirement one would you recommend ECG use? Explain.
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