‘Cost of software licenses’ would be classified as ______________________ i. Developmental cost ii. Operational cost iii. Variable cost iv. Direct cost

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The question asks how 'Cost of software licenses' would be classified among four cost categories.
Option a: i, iv (Developmental cost and Direct cost). Developmental cost relates to costs incurred during product development, and Direct cost is traceable to a specific cost object. Software license costs are not typically developmental or directly tied to a specific development activity in most standard classifications, making this pairing unlikely.
Option b: ii, iv (Operational cost and Direct cost). Operational costs are the ongoing expenses of running a business or delivering a product or service; software licenses are typically ongoing operational expenses (unless capitalized under certain accounting policies). Direct cost is appropriate if the license cost can be directly attributed to a particular product or project, which is often the case when the license is used for a specific product. This combination correctly reflects two plausible classifications for software licenses: they are light on development context (not primarily developmental) and can be direct if tied to a specific output.
Option c: ii, iii, iv (Operational cost, Variable cost, and Direct cost). While software licenses can be operational and sometimes variable, the inclusion of Variable cost is not universally appropriate for licenses, as many license fees are fixed (e.g., per-seat or per-period), so labeling them as variable may be misleading.
Option d: i, ii, iv (Developmental cost, Operational cost, and Direct cost). Including Developmental cost is questionable for license fees, since they are usually not incurred primarily for development work, and this option unnecessarily broadens the classification.
Overall, the most defensible pairing for typical treatment of 'Cost of software licenses' is ii and iv, recognizing it as an ongoing operational expense that can be a direct cost when linked to a specific product or project.

Systems Analysis and Design (CT026-3-1-SAAD-25-RESIT)

‘Cost of software licenses’ would be classified as ______________________ i. Developmental cost ii. Operational cost iii. Variable cost iv. Direct cost

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