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Chapter 5 2. Mereer Asbestos Removal Company renoves potentially toxic asbestos insalauion and related products from buildings. The on-site supervisors clain that the cost estimator
Chapter 5 2. Mereer Asbestos Removal Company renoves potentially toxic asbestos insalauion and related products from buildings. The on-site supervisors clain that the cost estimator does not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in older homes, and nonroutine work, such as removing ashestos-contaminated ceiling plaster in industrial baildings. The on-site supervisons believe that nonroutine work is far more expensive than routine work and should bear ligher eustomer charges. 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: The resource consumption table: 1) Prepare a report showing the first-stage allocations of overhead 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 johs aecording to the activity-based costing system. a. A routine 2,000 square-foot asbestos remuval job. b. A nonroutine 2,000 -square-foot asbestcos removal job. 1) Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. 2) Compute the activity rates for the activity cost pools, 3) determine the total cost and the average cost per thousand square feet for a routine 2000square-foot asbestos removal job and a nonroutine 2000 -square-foot asbestos removal job. a. Routine two thousand square foot job: b. Norroutine two thousand square foot job
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