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Mercer Asbestos Removal Company removes potentally toxic asbestos Insulation and related products from bulldings. There has been a long-simmering dispute between the company's estmator and
Mercer Asbestos Removal Company removes potentally toxic asbestos Insulation and related products from bulldings. There has been a long-simmering dispute between the company's estmator and the work supervisors. The on-site supervisors clalm that the estimators do not adequately distingulsh between routine work, such as removal of asbestos insulation around heating pipes in older homes, and nonroutune work, such as removing asbestos-contaminated celling plaster in industrial bullidings. 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 mutiply the square footage by $3.00 to determine the bid price. Since our average cost is only $2675 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 untl you actually start tearing things apart:" To shed light on this controversy, the company initated an activity-based costing study of all of its costs. Data from the activity-based costing system follow: 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. Perform the first-stage allocation of costs to the activity cost pools. c. A nonroutine 2,000-square-foot asbestos removal job. Complete this question by entering your answers in the tabs below. Compute the activity rates for the activity cost pools. Complete this question by entering your answers in the tabs below. 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 asbertos removal job. b. A routine 2,000squarefootasbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job
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