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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

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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 $4.20 to determine the bid price. Since our average cost is only $2.90 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 500 thousand square feet Estimating and job setup Number of jobs 400 jobs Working on monroutine jobs Number of nonroutine jobs 100 no routine jobs Other organization-sustaining costs and idle capacity costs) Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup. None Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost 431,000 713,000 104,000 63,000 330,000 530.000 $ 2,171,000 Distribution of Resource Consumption Across Activities A 23 MacBook Air TULALLUSL $ 2, 171.000 Total Distribution of Resource Consumption Nerons Activities Entimating Working on Removing and Job Non routine Asbeston Setup Jobs Wages and salaries 608 108 205 Disposal fees 609 08 400 Equipment depreciation SOS 10$ 158 On-site supplies 708 200 100 Office expenses 108 35 25+ Licensing and insurance 200 ON SOR Other 108 08 250 00 1000 1005 1008 1008 1001 1000 300 300 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 2 Reg 1 Reg 3A to 3C Perform the first stage allocation of costs to the activity cost pools 23 MacBook Air Db bu 90 - Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3A to 3C Other Total $ 0 Perform the first stage allocation of costs to the activity cost pools. Removing Estimating Working on and Job asbestos Nonroutine Setup Jobs Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance $ 0 $ $ 0 $ Total cost OOO OO 05 0 Reg 2 > & 23 MacBook Air

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