amework 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. I simply multiply the square footage by $3.60 to determine the bid price. Since our average cost is only $2845 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 106 nonroutine Jobs Other (organization-sustaining costs and idle capacity costs) None Note: The 180 nonroutine jobs are included in the total of 480 jobs. Both nonroutine jobs and routine Jobs require estimating and setup. Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost $ 460.eee 862,080 184,00 66,080 360.000 560.000 $ 2,412,000 Distribution of Resource Carlsuption Across Activities Escinating Removing andbou Asbestoy Se Lup Wages and salaries sex 15% Disposal fees 70% 50% 10 Equipment depreciation 60% On-site supplies 30 10% Office expenses 27 25% GY Licensing and Insurance Working on Nonnu unel SUB 202 38 59 18% 20% BOX Other 15 00 25% Total 108 18e 1001 100 100% 1085 300 199 Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance S98 70% 50% 60% 15% 25% 15 BX 10% 33% 25% 3X 2015 30% 15% 106 20% 60X TES 9713 25% K. 30% 155 TUJU 100% 100% 100X 100% 199X Required: 1. Perform the first stage allocation of costs to the activity cost pools. 2 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-square-foot asbestos removal Job. b. A routine 2000-square-foot asbestos removal Job. c. A nonroutine 2000-square-foot asbestos removal Job. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Rey 3A to 30 Other Total Setup Perform the first-stage allocation of costs to the activity cost pools. Removing Estimating Working on and Job Nonroutine asbestos Jobs Wages and salaries Disposal fees Equipment depreciation On-site supplies Ofice expenses Licensing and insurance Total cost Reg 23 Complete this question by entering your answers in the tabs below. Reg 1 Rey 2 Reg 3A to 30 Compute the activity rates for the activity cost pools, Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Activity Rate per thousand square feet per job per nonroutine job Reg 2 Reg 1 Reg JA to 30 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. (Round the "Average cost per thousand square feet" to 2 decimal places) a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job. Show less Routine Routine 1,000 sq. ft 2000 sq ft job job Nonroutine 2,000 sq ft job Total cost of the job Average Cost per thousand square feet