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 $4.20 to determine the bid price. Since our average cost is only $2.90 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 5e0 thousand square feet Estimating and job setup Number of jobs 400 jobs Working on non routine jobs Number of non routine jobs 100 nonroutine jobs Other (organization-sustaining costs and idle capacity costs) None Note: The 100 non routine jobs are included in the total of 400 jobs. Both non routine 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 $ 431,000 713,000 104,000 63,000 330,000 530,000 $ 2,171,000 Removing Asbestos Other 101 GON 60 50 Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Estimating working on and Job Nonroutine Setup Jobs 10 es 405 100 154 201 105 355 256 505 Total 100 100 100s 100 1009 100 256 en 305 301 TON ON Required: 15% 25% Equipment depreciation On-site supplies Office expenses Licensing and insurance 10% 20% 100% 100% 100% 100% 35% 259 50% 30% 30% 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. Req 1 Req 2 Req 3A to 3C Perform the first stage allocation of costs to the activity cost pools. Removing asbestos Other Total $ 258.600 $ 43, 100 427 800 Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost 26,000 Estimating Working on and Job Nonroutine Setup Jobs $ 43,100 $ 86,200 285,200 10,400 15,600 12,600 6,300 115,500 82,500 of 265,000 $ 181,600 $ 740,800 52,000 44,100 33,000 106,000 921,500 431,000 713,000 104,000 63,000 330,000 530,000 2,171,000 99,000 159,000 327,100 $ $ $ Regt Reg 2 >