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 for 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 $2.175 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 Cout Pool Activity Menure Total activity Removing anbentos Thousands of square feet 800 thousand square feet Tatimating and job setup Number of job 500 jobs Working on nonroutine joba Mamber of nonroutine joba 100 nonroutine joba other organisationsuntaining costo and idle capacity costs) Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both non routine jobs and routine jobs require estimating and setup. None Coats for the Year Wages and salaries Disposal toes Equipment depreciation On-site supplies ottice expenses Licensing and insurance Total cost 300,000 700,000 90,000 50,000 200,000 400.000 51.740,000 Distribution of Resource Consumption across Activities BBB 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 for 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 $2.175 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 Cout Pool Activity Menure Total activity Removing anbentos Thousands of square feet 800 thousand square feet Tatimating and job setup Number of job 500 jobs Working on nonroutine joba Mamber of nonroutine joba 100 nonroutine joba other organisationsuntaining costo and idle capacity costs) Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both non routine jobs and routine jobs require estimating and setup. None Coats for the Year Wages and salaries Disposal toes Equipment depreciation On-site supplies ottice expenses Licensing and insurance Total cost 300,000 700,000 90,000 50,000 200,000 400.000 51.740,000 Distribution of Resource Consumption across Activities BBB
