ANALYSIS OF DIRECT AND INDIRECT COSTS

This assignment is a continuation of the previous assignments where you will focus more on your company,
Universal Drones Inc., and VectorCal. You will make more assumptions on specific types of costs.
Compare your company with VectorCal relative to the price of acquisition, semi-variable costs, and allocated
direct and indirect costs of the drone navigation system. Justify the response.
Assignment Instructions
Write a 2–3 page paper in which you:

1. Analysis of Universal Drones, Inc.’s expenses
   o Analyze and provide examples in detail the following costs that both Universal Drones and VectorCal will
   incur when contracting with the government.
   o Labor costs.
   o Manufacturing costs.
   o Research and development.
   o General administrative expenses.
2. Analysis of Direct and Indirect Costs
   o From the previous section define and indicate which costs will be direct and indirect.
   o Direct costs.
   o Labor.
   o Manufacturing.
   o Research and development.
   o General & administrative expenses.
   o Indirect Costs
   o Labor.
   o Manufacturing.
   o Research and development.
   o General & administrative expenses.
3. Allocation Methods
   o Discuss the following cost allocation methods and indicate which ones that Universal Drones, Inc., and
   VectorCal would use. Remember to provide a rationale for each of these methods.
   o Units of production method.
   o Machine hour method.
   o Direct labor hour method.
   o Direct labor cost method.

Sample Solution