Answered step by step
Verified Expert Solution
Question
1 Approved Answer
any helpnwould be apprecitated! Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between
any helpnwould be apprecitated!
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 $2.80 to determine the bid price. Since our average cost is only $2,305 per square foot that leaves enough cushion to take care of the additional costs of nontoutine 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 800 thousand square feet Estivating and job setup Number of jobs 400 Sobs Morking on nonroutine Jobs Number of ronroutine jobs 100 no routine Jobs Other (organization-sustaining costs and idle capacity costs) Note: The 100 noncoutine jobs are included in the total of 400 jobs Both nonroutine Jobs and routine jobs require estimating and setup None Costs for the Year Wages and solaries Disposal fees Equipent depreciation On-site supplies office expenses Licensing and insurance Total cost $ 332.000 740,000 90.000 54,000 240,000 140.000 5.1,896,000 Distribution of Resource Consumption across Activities Estimating World on Removing and job Non routine Asbestos Setup Jobs Wages and salaries other Total 50% 10% sos Disposal fees 10% 70% 100% OK Equipment depreciation Sex 0 100% LO 5% 2013 Onsite supplies 35% 60% 100% 25% Office expenses 15% 10% 100% 40% 15% Licensing and insurance 35% 100% 256 OR 15% 100% Required: 1. Perform the first stage allocation of costs to the activity cost pools 2. Compute the activity rates for the activity cost pools a tising the activitats van have comuter determine the total cost and the averaceros per thousand quare feet of each of the 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 2,000-square foot asbestos removal job c. A nonroutine 2,000 square foot asbestos removal job Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3A 30 Perform the first stage allocation of costs to the activity cost pools. Removing asbestos Estimating and Job Setup Working on Nonroutine Jobs Other Total S 0 0 0 Wages and salarion Disposal foos Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost 0 0 0 $ 05 05 0 $ 0 Reg 2 > Reg 1 Reg 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 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Red 3A to 3C 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 1.000 Routine 2,000 square feet job square footjob Nonroutine 2,000 square footjob Total cost of the job Average Cost per thousand square feet Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started