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 $2.50 to determine the bid price. Since our average cost is only $2.155 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. Nativity Cost Pool Activity Measure Total Activity Removing asbestos Thousands of square feet 1,000 thousand quare feet stimating and job setup Number of jobs 400 Jobs working on nonroutine joba Bumber of nonroutine Jobs 100 nonroutine joba other organization-sustaining costs and idie capacity coto) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup ances Coats for the Year Wages and salarios Disposal fees Equipment depreciation On-site supplies Orice expenses Licensing and insurance Total coat $ 320,000 706,000 90.000 53,000 230,000 430.000 $1,037.000 Consapostivities Check my work 5 Estimating and job setup Number of jobs 400 jobs working on non routinn Jobs Namber of non routine sobe 100 noncoutine job other organization staining costs and idle capacity coat) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup Print rices Coats for the Year Hoges and saleries $328,000 Disposal fees 706,000 Equipment depreciation 90,000 On-site supplies 53,000 orice expenses 230,000 Licensing and insurance 430.000 Total cost 5 1,837,000 Distribution of Resource Consumption across Activities Estimating working on Removing and Job Monroutine Asbestos Setup Joha Other Total Nages and salaries 601 101 200 100 1008 Leposal fees EN 00 400 08 1008 Equipment depreciation 400 58 200 350 3004 On-site supplies 700 200 100 00 100 orice expenses ION 358 255 300 1001 Licensing and insrance 350 00 500 150 1001 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 routine 1,000-square-foot asbestos removal job, b. A routine 2,000 square foot asbestos removal Job. on some foot asbestos removal ob Check my On-site supplies 701 office expenses 201 100 08 105 1000 356 Licensing and insurance 256 300 358 1005 OR 500 151 1001 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 3A to 30 Perform the first stage allocation of costs to the activity cost pools. Removing asbestos Estimating and Job Setup Working on Nonroutine Jobs Other Total Wages and salaries Disposal fees