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 $2.01 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 Cost Pool Removing asbestos Estimating and job setup Working on non routine jobs Other (organization-sustaining costs and idle capacity costs) Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs Total Activity 850 thousand square feet 400 jobs 100 nonroutine jobs 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 Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost $ 308,000 706,888 90,000 50,000 210,000 410,000 $ 1,774,000 Distribution of Resource Consumption Across Activities Estimating Working on Removing and Job Non routine Asbestos Setup Jobs Wages and salaries 604 104 20% Disposal fees 704 09 304 Equipment depreciation 405 5 25 On-site supplies 789 200 105 office expenses 15$ 354 201 Licensing and insurance 25 es ses Other 105 O 30 04 304 254 Totat 1009 100 1001 1009 1009 100% Reg 1 Reg 2 Req 3A to 3C Perform the first-stage allocation of costs to the activity cost pools. Removing asbestos Estimating and Job Setup Working on Nonroutine Jobs Other Total $ 0 0 Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost OOO 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 Rent Reg 2 > Complete this question by entering your answers in the tabs below. Req 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 Reg 1 Reg 2 Req IA to 30 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-foot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job. Show less Routine 1,000 Routine 2,000 square feet job square feet job Nonroutine 2,000 square feet Job Total cost of the job Average Cost per thousand square feet