$39 profit Comprehensive ABC implement ation (Learning Objectives 2 & 3) uorking develops software fo ve. Gibson Networking offers a wide variety of software, from simple programs Gibson Netw and Gibson Networking's competitors continue to introduce new products r internet applications. The market is very Net at low prices. ew users to create personal webpages to complex commercial search Like most software companies, Gibson Networking's raw material costs are Networking has just hired Nicole Merrell, a recent accounting graduate. insignificant. ftware Department Manager Jeff Gire to join her in a pilot activity-based Merrell asks S costing study. eretMerrell and Gire identify the following activities, related costs, and cost g study. allocation bases: Estimated Quantity of Allocation Base Estimated Indirect Activity Costs $1,500,000 2,700,000 Allocated Base Activity Aoplications development. Content productio. esting tal indirect costs.. New applications 3 new applications Lines of code 9 million lines 270,000 Testing hours 1,500 testing hours Gibson Networking 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 480,000 lines of code and 70 hours of testing, while X-Secure requires 12 million lines of code and 420 hours of testing. Gibson Networking expects to produce and sell 25,000 units of X-Page and 9 units of X-Secure. Requirements 1. Compute the cost allocation rate for each activity. e activity based cost allocation rates to compute the indirect cost of each unit of ge and X-Secure. (Hint: Compute the total activity costs allocated to each product 2. Use the b ne and then compute the cost per unit.)