Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a long-simmering...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a long-simmering dispute between the company's estimator and the work supervisors. The on-site supervisors claim the estimators do not adequately distinguish between routine work, such as removing asbestos insulation around heating pipes in older homes, and nonroutine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: "My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Because our average cost is only $2.575 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart." To shed light on this controversy, the company gathered the following activity-based costing data: Activity Measure Thousands of square feet Number of jobs Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Other (organization-sustaining costs and idle capacity costs) None Number of nonroutine jobs Total Activity 800 thousand square feet 400 jobs 100 nonroutine jobs Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup. Costs for the Year Disposal fees On-site supplies Wages and salaries Equipment depreciation Licensing and insurance Total cost Office expenses $ 372,000 775,000 96,000 58,000 280,000 480,000 $ 2,061,000 Distribution of Resource Consumption Across Activities Estimating and Job Working on Nonroutine Removing Asbestos Setup Jobs Other Total Wages and salaries 60% 10% 20% 10% 100% Disposal fees 60% 0% 40% 0% 100% Equipment depreciation 50% 10% 15% 25% 100% On-site supplies 70% 20% 10% 0% 100% Office expenses 10% 40% 20% 30% 100% Licensing and insurance 25% 0% 60% 15% 100% Required: Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a long-simmering dispute between the company's estimator and the work supervisors. The on-site supervisors claim the estimators do not adequately distinguish between routine work, such as removing asbestos insulation around heating pipes in older homes, and nonroutine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: "My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Because our average cost is only $2.575 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart." To shed light on this controversy, the company gathered the following activity-based costing data: Activity Measure Thousands of square feet Number of jobs Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Other (organization-sustaining costs and idle capacity costs) None Number of nonroutine jobs Total Activity 800 thousand square feet 400 jobs 100 nonroutine jobs Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup. Costs for the Year Disposal fees On-site supplies Wages and salaries Equipment depreciation Licensing and insurance Total cost Office expenses $ 372,000 775,000 96,000 58,000 280,000 480,000 $ 2,061,000 Distribution of Resource Consumption Across Activities Estimating and Job Working on Nonroutine Removing Asbestos Setup Jobs Other Total Wages and salaries 60% 10% 20% 10% 100% Disposal fees 60% 0% 40% 0% 100% Equipment depreciation 50% 10% 15% 25% 100% On-site supplies 70% 20% 10% 0% 100% Office expenses 10% 40% 20% 30% 100% Licensing and insurance 25% 0% 60% 15% 100% Required:
Expert Answer:
Answer rating: 100% (QA)
Mercer Asbestos Removal Company ActivityBased Costing Analysis 1 Calculate the activity rates for ea... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Question 2 : Identify any one specific sector of your choice from traditional financial services ( e . g . , banking, insurance, payments, investment ) . Discuss the key challenges and opportunities...
-
The following information is from the balance sheet and income statement of Duchesne Company. Increase in accounts receivable $300 Decrease in income taxes payable 170 Depreciation 1,000 Net income...
-
[ 5.7 ] On what does the moose carrying capacity depend? (If you're not sure, review the introductory material for a clue.)
-
Use the data below to compute for the Gini coefficient. Round off the Gini coefficient to four (4) decimal places. INCOME CLASS (K) FIRST SECOND THIRD FOURTH FIFTH INCOME SHARE (YK) 0.02 0.12 0.28...
-
Country M levies a 10 percent excise tax on the retail price of any automobile purchased in the country. This year, the aggregate purchase price subject to tax was $8 million, so current year revenue...
-
New Flyer Industries Inc. reported the following measures for 2015 and 2014: ___________________________________2015...................2014 Debt to total...
-
The Decoste Furniture Company has two departments. Data for 2007 include the following: Direct materials (30 types) $65,000 Work-in-process (in assembly) 50,000 Finished goods 40,000 Manufacturing...
-
Video Concepts, Inc. (VCI) markets video equipment and film through a variety of retail outlets. Presently, VCI is faced with a decision as to whether it should obtain the distribution rights to an...
-
Problem 3-17 (Algo) Cost Flows; T-Accounts; Income Statement [LO3-2, LO3-3, LO3-4] Supreme Videos, Incorporated, produces short musical videos for sale to retail outlets. The company's balance sheet...
-
Help with the requirements. Budget Deli operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Budgetman, prepares and delivers meals to the hospitals. It has...
-
Describe the nature of the Smart supply chain sustainability? What is the objective of Smart supply chain sustainability? Created a brief background? What Methods? Data collection method Data...
-
The promised yield, today, is 13% for a two-year, 10%-coupon-rate, $1,000-face-value bond that has just distributed its first coupon. The fundamentals of the company indicate that if the bond goes...
-
Find the angle between the lines 2y-3x-50 and 3y - 2x + 6 = 0.
-
(a) Explain the main features of covered bonds that make them an attractive form of bank-issued instruments to market investors. (b) Are covered bonds subject to the moral hazard problem commonly...
-
Set one SMART goal for yourself for this year. SMART stands for Specific, Measurable, Attainable, Relevant, and Time-bound. Answer the following questions create SMART goal: What specifically want to...
-
Waste Industries is evaluating a $58,500 project with the following cash flows. Years Cash Flows 1 $ 9,780 12345 19,500 3 20,600 4 25,300 5 27,800 The coefficient of variation for the project is...
-
g(x) = x 5 5x 6 a. Show that g(x) = 0 has a root, , between x = 1 and x = 2. b. Show that the equation g(x) = 0 can be written as x = (px + q) 1/r , where p, q and r are integers to be found. The...
-
Why are the legal procedures related to mergers so onerous?
-
Where does the creation of value lie in a merger?
-
Alpha AG is wholly owned by Mr Alpha and Beta AG is wholly owned by Mr Beta. The key figures for the two companies are as follows: Alpha acquires Beta. Calculate the shareholdings (as a percentage)...
Study smarter with the SolutionInn App