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 $3.20 to determine the bid price. Since our average cost is only $2.805 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: hativity Cont Pool Activity Measure Total Mtivity Removing asbestos Thousands of square feet 050 thousand square foot Kotimating and job setup Number of Job 400 job Working on noncoutine Jobs Number of non routine Job 100 non routine Jobs Other (organisation-sustaining conts 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. Coata for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost $ 440,000 824,000 108,000 64,000 340,000 540,000 $ 2,316,000 Distribution of Resource Consumption Across Activities Estimating Working on Removing and Job Nonroutine Asbestos Setup Jobs Wages and salaries 500 101 300 Disposal fees 70N 08 308 Equipment depreciation 401 58 209 On-site supplies 601 300 100 office expenses 151 354 200 Licensing and insurance 309 03 600 Other 100 08 350 os 308 100 Total 1000 100% 1000 1008 1000 1000 31 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 Req 3A to 3C Perform the first stage allocation of costs to the activity cost pools. Estimating Working on Removing and Job Nonroutine asbestos Other Total Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req t Other Total Perform the first stage allocation of costs to the activity cost pools. Removing Estimating Working on and Job Nonroutine asbestos Setup Jobs Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost Roq Req 2 ) Reg 1 Reg 2 Req 3A to 3C Compute the activity rates for the activity cost pools. Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Activity Rate per thousand square feet per job per nonroutine job Complete this question by entering your answers in the tabs below. Reg 1 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-fot asbestos removal Job. c. A nonroutine 2,000-square-foot asbestos removal job. Show less Routine Routine Nonroutine 1,000 sq. ft. 2,000 sq. ft. 2,000 sq. ft. job job Job Total cost of the job Average Cost per thousand square feet