6-18

1. Using exhibit 6-7 as a guide, perform the first stage allocation of costs to the activity cost pools.

2. Using exhibit 6-7 as a guide, compute the activity rates for the activity cost pools.

3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system.

a) A routine 1,000-sqaure foot asbestos removal job.

b) A routine 2,000-sqaure foot asbestos removal job.

c) A nonroutine 2,000-sqaure foot asbestos removal job.

4. Given the results you obtained in (3) above, do you agree with the estimator that the company's present policy for bidding on jobs is adequate?