Reswick develops software for internet applications. The market is very competitive, and Reswick has just hired Nicole Merrell, a recent university graduate in accounting. Merrell Reswick's competitors continue to introduce new products at low prices. Reswick offers a wide asks Software Department Manager Jeff Gire to join her in a pilot activity based costing variety of software - from simple programs that enable new users to create personal webpages to study. Merrell and Gire identify the following activities, related costs, and cost-allocation complex commercial search engines. Like most software companies, Reswick's raw material bases: costs are insignificant. (Click the icon to view the information.) Reswick is planning to develop the following new applications: - X-Page-software for developing personal webpages - X-Secure-commercial security and firewall software X-Page requires 580,000 lines of code and 110 hours of testing, while X-Secure requires 8.7 million lines of code and 660 hours of testing. Reswick expects to produce and sell 55,000 units of X-Page and 13 units of X-Secure. 1. Compute the cost allocation rate for each activity. 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.) 3. Reswick's original single-allocation-based cost system allocated indirect costs to products at $89 per programmer hour. X-Page requires 8,000 programmer hours, while X-Secure requires 12,000 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. 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. 5. What are the clues that Reswick's ABC system is likely to pass the cost-benefit test