Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i specifically need help with estimating job setup and the req 3A- 3C Mercer Asbestos Removal Company removes potentially toxic asbestos Insulation and related products

i specifically need help with estimating job setup and the req 3A- 3C image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 celling 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 $2.60 to determine the bid price. Since our average cost is only $2.35 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 Activity Manure Total Activity Removing asbestos Thousands of square feet 1,000 thousand square feet Estimating and job setup Number of jobs 500 jobs Working on nonroutine joba Number of nonroutine jobs 100 nanroutine jobs Other (organization-sustaining conta and idle capacity costs) None Note: The 100 nonroutine jobs are included in the total of 500 joba. Doth monroutine jobs and routine jobs require estimating and setup. Conts for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies 402,000 737,000 104,000 64,000 Coutor the Year Wages and salaries Disposfees Equiposent depreciation On-site supplies office expenses Licensing and insurance Total cost $ 402,000 737,000 104,000 64,000 330,000 460,000 $ 2,097,000 Distribution of Resource Consumption Aerona Activities Estimating Working on Removing and Job Nonroutine Asbestos Setup Jobs Wages and salaries 505 158 208 Disposal fees 609 08 400 Equipment depreciation 503 101 159 On-site supplies 708 203 105 ottice expenses 108 353 258 Iicensing and insurance 304 02 508 Other 158 00 250 07 301 203 Total 100% 100% 100% 1000 1005 1008 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 Reg A to 3C Perform the first stage allocation of costs to the activity cost pools. Other Total S 60,300 $ 0 Estimating Working on Romoving and Job Nanroutine asbestos Setup Jobs 201,000 $ 201,000 $ 80,400 442,200 737,000 294,800 52,000 104,000 15,600 44,800 84.000 6.4045 33,000 460,000 82,500 138,000 2.097.000 230,000 911,000 $3,663,000 $ 709,700 $ Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost 25,000 0 542.700 1,474,000 197 600 115.200 674,500 2,557,000 99.000 92,000 277 300 $ 5,581000 Req 2 > Req 1 Req 2 Req 3A to 3C Using the activity rates you have computed, determine the total cost and the average co of the following jobs according to the activity-based costing system. (Round the "Averag 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. Routine Routine 1,000 sq. ft. 2,000 sq. ft. job job Nonroutine 2,000 sq. ft. job $ 9,317 $ 4,659.00 Total cost of the job. Average Cost per thousand square feet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions