Please help with requirement 4 and show any calculations! Thank you!
Maloney Internet develops software for internet applications. The market is very competitive, and Maloney Internet's competitors continue to introduce new products at low prices. Maloney Internet offers a wide variety of software from simple programs that enable new users to create personal webpages to complex commercial search engines. Like most software companies, Maloney Interer's raw material costs are insignificant Maloney Internet has just hired Nicole Merrell, a recent university graduate in accounting. Merrell asks Software Department Manager Jeff Gire to join her in a pilot activity based costing study. Merrell and Gire identify the following activities, related costs, and cost-allocation bases: (Click the icon to view the information.) Requirements 1 Data Table 350,000 Testing hours 1 Requirement 1. Compute the cost allocation rate for each activity Determine the formula, then compute the cost allocation rate for each activity. (Round your answers to the nearest cent.) Estimated Estimated Activity Indirect Allocation Quantity of Estimated indirect activity cost Cost allocation base (estimated) overhead rate Activity Activity Costs Base Allocation Base S $ 1,800,000 Appl. Dev. 6 $ 300,000 application Applications development $ 1,800,000 New applications 6 new applications Content prod. S 3,000,000 10,000,000 = $ 0.30 /line Content production ........ 3,000,000 Lines of code 10 million lines Testing $ 350,000 2,000 = $ 175 /hour Testing 2,000 testing hours 5.150.000 Requirement 2. Use the activity based cost allocation rates to compute the indirect cost of each unit of X-Page and X-Secure. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) (Round the cos Total Indirect costs X-Page X-Secure Maloney Intemet is planning to develop the following new applications: Applications development $ 300,000 $ - X-Page-software for developing personal webpages 300,000 X-Secure-commercial security and firewall software Content production 174,000 2,610,000 X-Page requires 580,000 lines of code and 190 hours of testing, while X-Secure requires Testing 33,250 199,500 8.7 million lines o sell 60.000 of code and 1,140 hours of testing. Maloney Internet expects to produce and units of -and 17 units of X-Secure Total costs S 507,250 $ 3,109,500 60,000 17 Number of units Print Done 8.45 $ 182 911.76 Per unit cost Requirement 3. Maloney Internet's original single-allocation-base costing system allocated indirect costs to products at $120 per programmer hour. X-Page requires 16,000 programmer hours, while X-Secure requires 24,000 programmer hours. Compute the total indirect costs allocated to X-Page and X-Secure under the original system. Then, compute the indirect cost per unit for each product First, compute the total indirect costs allocated to X-Page and X-Secure under the original single-allocation-base system. Select the formula, then enter the amounts and calculate the indirect cost allocated. Indirect cost Product Cost allocation rate * Estimated qty of the allocation base = allocated X-Page S 120 16,000 $ 1,920,000 X-Secure S 120 24,000 = $ 2,880,000 Now compute the indirect cost per unit for each product under the original single-allocation-base system. Begin with X-Page, then compute X-Secure. (Round the cost per unit to the nearest cent.) $ Total indirect costs allocated Number of units X-Page 1,920,000 $ 60,000 32.00 $ X-Secure 2,880,000 17 Per unit cost 169,411.76 Requirement 4. Compare the activity-based costs per unit to the costs from the simpler original system. How have the unit costs changed? Explain why the costs changed as they did. Enter your answer in the edit fields and then click Check Answer ? Requirement 4. Compare the activity-based costs per unit to the costs from the simpler original system. How have the unit costs changed? Explain why the costs changed as they did. The original system overcosted X-Page and undercosted X-Secure this difference and allocates of the The original system allocated overhead to X-Secure than to X-Page. But X-Secure required times as many lines of code and times as much testing as X-Page. The ABC system content production and testing costs to X-Secure. Maloney Internet develops software for internet applications. The market is very competitive, and Maloney Internet's competitors continue to introduce new products at low prices. Maloney Internet offers a wide variety of software from simple programs that enable new users to create personal webpages to complex commercial search engines. Like most software companies, Maloney Interer's raw material costs are insignificant Maloney Internet has just hired Nicole Merrell, a recent university graduate in accounting. Merrell asks Software Department Manager Jeff Gire to join her in a pilot activity based costing study. Merrell and Gire identify the following activities, related costs, and cost-allocation bases: (Click the icon to view the information.) Requirements 1 Data Table 350,000 Testing hours 1 Requirement 1. Compute the cost allocation rate for each activity Determine the formula, then compute the cost allocation rate for each activity. (Round your answers to the nearest cent.) Estimated Estimated Activity Indirect Allocation Quantity of Estimated indirect activity cost Cost allocation base (estimated) overhead rate Activity Activity Costs Base Allocation Base S $ 1,800,000 Appl. Dev. 6 $ 300,000 application Applications development $ 1,800,000 New applications 6 new applications Content prod. S 3,000,000 10,000,000 = $ 0.30 /line Content production ........ 3,000,000 Lines of code 10 million lines Testing $ 350,000 2,000 = $ 175 /hour Testing 2,000 testing hours 5.150.000 Requirement 2. Use the activity based cost allocation rates to compute the indirect cost of each unit of X-Page and X-Secure. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) (Round the cos Total Indirect costs X-Page X-Secure Maloney Intemet is planning to develop the following new applications: Applications development $ 300,000 $ - X-Page-software for developing personal webpages 300,000 X-Secure-commercial security and firewall software Content production 174,000 2,610,000 X-Page requires 580,000 lines of code and 190 hours of testing, while X-Secure requires Testing 33,250 199,500 8.7 million lines o sell 60.000 of code and 1,140 hours of testing. Maloney Internet expects to produce and units of -and 17 units of X-Secure Total costs S 507,250 $ 3,109,500 60,000 17 Number of units Print Done 8.45 $ 182 911.76 Per unit cost Requirement 3. Maloney Internet's original single-allocation-base costing system allocated indirect costs to products at $120 per programmer hour. X-Page requires 16,000 programmer hours, while X-Secure requires 24,000 programmer hours. Compute the total indirect costs allocated to X-Page and X-Secure under the original system. Then, compute the indirect cost per unit for each product First, compute the total indirect costs allocated to X-Page and X-Secure under the original single-allocation-base system. Select the formula, then enter the amounts and calculate the indirect cost allocated. Indirect cost Product Cost allocation rate * Estimated qty of the allocation base = allocated X-Page S 120 16,000 $ 1,920,000 X-Secure S 120 24,000 = $ 2,880,000 Now compute the indirect cost per unit for each product under the original single-allocation-base system. Begin with X-Page, then compute X-Secure. (Round the cost per unit to the nearest cent.) $ Total indirect costs allocated Number of units X-Page 1,920,000 $ 60,000 32.00 $ X-Secure 2,880,000 17 Per unit cost 169,411.76 Requirement 4. Compare the activity-based costs per unit to the costs from the simpler original system. How have the unit costs changed? Explain why the costs changed as they did. Enter your answer in the edit fields and then click Check Answer ? Requirement 4. Compare the activity-based costs per unit to the costs from the simpler original system. How have the unit costs changed? Explain why the costs changed as they did. The original system overcosted X-Page and undercosted X-Secure this difference and allocates of the The original system allocated overhead to X-Secure than to X-Page. But X-Secure required times as many lines of code and times as much testing as X-Page. The ABC system content production and testing costs to X-Secure
