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 asbestoscontaminated ceiling plaster in industrial buildings. The onsite 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: \"Myjob is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Since our average cost is only $2.305 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 Activity Measure Total Activity Removing asbestos Thousands of square 'Feet 388 thousand square feet Estimating and job setup Number of jobs 488 jobs working on nonroutine jobs Number of nonroutine jobs 188 nonroutine jobs Other (organization-sustaining costs and idle capacity costs) None Note: The 100 nonroutinejobs are included in the total of 400jobs. Eloth nonroutinejobs and routinejobs reouire estimating and setup. Costs for the Year l.ilages and salaries 5 332,888 Disposal 'Fees 748,888 Equipment depreciation 98,888 Gin-site supplies 54,888 O'F'Fice expenses 248,888 Licensing and insurance 443,339 Total cost 5 1:895:33? Distribution of Resource Consumtion Across Activities Estimating lurking on Removing and Job lilonroutine Asbestos Setup Jobs Other Total l.~.|ages and salaries 58% 18% 38% 18% 188% Disposal 'Fees 78% 8% 38% 8% 188% Equipment depreciation 48% 5% 28% 35% 188% On- site supplies 68% 25% 15% 8% 188% Office expenses 18% 48% 15% 35% 188% Licensing and insurance 25% 8% 58% 15% 188% Required: 1. Perform the rststage 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 followingjobs according to the activitybased costing system. a. A routine 1,000squarefoot asbestos removaljob. b. A routine 2,000quuarefoot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job. Wages and salaries Equipment depreciation Onsite supplies Ofce expenses Licensing and insurance