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Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company's estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work, such as removal of 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 that 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, l simply multiply the square footage by $3.60 to determine the bid price. Since our average cost is only $2.84 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. 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 initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow: Activity Cost Pool Activity Measure Total Activity Removing asbestos Thousands of square feet. 750 thousand square feet Estimating and job setup Number of jobs 400 jobs Working on nonroutine jobs Number of nonroutine jobs 100 non routine jobs Other (organization-sustaining costs and idle capacity costs) None The 100 nonroutine jobs are included in the total of 400 jobs Both non routine jobs and Note routine jobs require estimating and setup Costs for the Year Wages and salaries 460, 000 Disposal fees 862,000 Equipment depreciation 104,000 site supplies 66,000 On Office expenses 360,000 Licensing and insurance 560,000 2,412,000 Total cost