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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

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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 $2.455 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 arking on nonroutine jobs Other (organization-sustaining costs and idle capacity costs) Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs Total Activity 1,000 thousand square feet 500 jobs 100 routine jobs Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both nonroutine jobs and routine jobs require estimating and setup Costs for the Year Sages and salaries isposal fees $ 407,000 500,000 96,000 50,000 500,000 Equipment depreciation office expenses Licensing and Insurance 450,000 Tatal cast $ 2,149,000 Distribution of Resource Consumption Acress Activities Extinating working a and Nooroutine

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