Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the companys 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:

Activity Cost Pool	Activity Measure	Total Activity
Removing asbestos	Thousands of square feet	850	thousand square feet
Estimating and job setup	Number of jobs	400	jobs
Working on nonroutine jobs	Number of nonroutine jobs	100	nonroutine jobs
Other (organization-sustaining costs and idle capacity costs)	None
Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup.

Disposal fees		824,000
Equipment depreciation		108,000
On-site supplies		64,000
Office expenses		340,000
Licensing and insurance		540,000
Total cost	$	2,316,000

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.

Wages and salaries Disposal fees Equipment depreciatiorn 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 50% 70% 40% 608 15% 30% Setup 108 08 58 30% 35% 08 Jobs 308 30% 20% 10% 20% 608 Other Total 1008 1008 1008 1008 1008 100% 108 0% 35% Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance 30% 108 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 tho 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. & Answer is complete but not entirely correct. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 2Req 3A to 3C Rea 1 Perform the first-stage allocation of costs to the activity cost pools. Removing asbestos Estimating Working on Nonroutine and Job Other Total Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost $ 220,000 44,000 132000 44,000440,000 824,000 432005,400 2160037,800108.000 64,000 51,000119,00068,00102000 340,000 0 4000540,00 $ 1.091,400 5 187.600 5 799 200 237 800 218000 247.200 576,800 38,4009.2006.400 162,000 324,000 Req 2 > K Prev 6 of 6 Next> 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A to 3C | Compute the activity rates for the activity cost pools. Activity Cost Pool Removing asbestos Estimating and job Working on nonroutine jobs Activity Rate 1.284 per thousand square $ 469 per job 7,992 e per nonroutine job |$ Req 1 Req 3A to 3C > K Prev 6 of 6 Next > 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of eac 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2Req 3A to c 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 f 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. Req 3A to 3C eet" to 2 Show less & Routine Nonroutine Routine 1,000 sq. ft. job $ 2,000 sq. ft. job 2,000 sq. ft job 1,753 O s 3.037 O s 10.560 Total cost of the job 2.568.00 * Average Cost per thousand square feet |s 1,284 00 C)s 2.568.00 C)s Req2 Req 3A to 3C Prev 6016 ::: Next