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 estmator 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 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, is dcult to know what is routne or not routine until you actually start tearing things apart coiling plaster in industrial buildings. The on-site 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 Total Activity Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Other (costs of idle capacity and Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs 500 thousand square feet 400 jobs 100 nonroutine jobs costs) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup Costs for the Year Wages and salaries Disposal fees S 431,000 713,000 104,000 63,000 330,000 530,000 On-site supplies Office expenses Licensing and insurance 2,171,000 Total cost Distribution of Resource Consumption Across Activities Estimating Working on Removing and Job Nonroutine Asbestos Setup Asbestos 10% 40% 25% o% Total 100% 10% Wages and salaries Disposal fees 60% 10% 15% On-site supplies Ofice expenses Licensing and insurance 30% 20% 10%