chapter 7 question 2
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chapter 7 qurstion 2
2 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 $2.845 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 cont Pool hctivity 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 nonroutine jobs Other (organization-containing con and idle capacity costs) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine Jobe require estimating and setup. Conts for the Year Wagen und Salarien Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total 008 $ 450,000 862,000 104,000 66,000 360,000 560,000 52.412,000 Check my work 2 Distribution of Resource Consumption across Activities Removing Estimating and Working on Asbestos Job Setup Nonroutine Jobs Wages and salaries SON 155 200 Disposal fees 700 08 301 Equipment depreciation 500 101 150 On-site supplies 602 301 100 office expenses 150 351 201 Licensing and Insurance 250 01 608 Other Total 150 1001 08 1008 258 1000 ON 1004 301 1001 156 1000 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 avbrage 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 to 30 Perform the first stage allocation of costs to the activity cost pools. MC Graw Check my wor 2 c. A nonroutine 2,000-square-foot asbestos removal job Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req 3A to 30 Other Total Perform the first-stage allocation of costs to the activity cost pools. Removing Estimating Working on and Job asbestos Nonroutine Setup Jobs Wages and salaries Disposal foes Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost Reg Reg 2 > 3. Using the activity rates you have computed, determine the total cost and the average 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 Reg 2 Req t Compute the activity rates for the activity cost pools. Activity Cost Pool Activity Rate Removing asbestos per thousand square feet Estimating and job setup per job Working on nonroutine jobs per nonroutine job 2 - Miu MUUD 3. Using the activity rates you have computed, determine the total cost and the average cost per thousan 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. Skipped Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req 3A to 30 Compute the activity rates for the activity cost pools. Activity Cost Pool Activity Rato Removing asbestos per thousand square feet Estimating and job setup per job Working on nonroutine jobs per nonroutine job 2 Check my work 3. Using the acuvity rates you nave computea, determine the total cost ana the average cost per tousana square feet or 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. Skipoed Complete this question by entering your answers in the tabs below. Req1 Reg 2 Reg 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 Routine 1,000 sq. ft. 2,000 sq.ft job job Nonroutine 2,000 sq.ft Job Total cost of the job Average Cost per thousand square foot
