Question: Determine the total cost of the "Program New Games Activity." In doing so, for each cost, identify the resource driver(s) and the amount that should be allocated to this activity. Note, if you elect to fully load your cost, indicate the new total for the fully loaded cost and where the added cost came from. Show all of your work for partial credit.
SESSION 8 & 9 - ABM & VALUE CHAIN
SECTION
USE THE FOLLOWING INFORMATION FOR QUESTION 1:
Jacob and Jillien founded J Games after graduating from Babson. J Games is a producer of one and the Nintendo Switch obsolete. Since its release, it has been a huge hit and all of its competitors have ceased operations due to their inability to compete.
Charged with two responsibilities:
1. Develop exciting games for the J-Babo 2.0
2. Develop their next-generation gaming console, the J-Benny (which was named in honor of their MAC professor. Note: I realize this is shameless self-promotion)
1. Design/Prototype Next-Generation Console J-Benny
2. Create bug fixes/updates for existing gaming console (200 updates per year)
3. Program new games (15 new games planned per year)
4. Interact with users on gaming discussion boards
The team has an annual budget of $1.5M. The director earns a salary of $100,000 plus approximately 1,000 hours managing issues related to the prototype of the next-gen system, 400 hours overseeing bug fixes, and 600 hours managing the programming new games activity. There are four engineers who each earn $200,000 a year plus 25% in fringe benefits. One of the engineers is completely dedicated to the prototype of the next-gen console. The remaining three divide their time among fixing bugs in the existing console (40%), programming new games (50%), and interacting with users on discussion boards (10%). The R&D team works in a dedicated 1,500 sq. ft. facility that rents for $200,000 per year. The facility costs include all utility costs as well as the costs of furniture and fixtures plus personal computers. The director's office is 150 sq. ft. The server room occupies 450 sq. ft. The remainder of the space is used by the four engineers (who each occupy an equal amount of space).
The J-Babo 2.0 console has 20 games, the J-Benny console has 10 games, and the fan discussion boards have 10 games. The R&D team spends $125,000 annually on components for the Next-Gen console prototype. Some issues have arisen with the R&D team's performance, so Jacob and Jillien are interested in learning how the R&D Team uses its resources.
