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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 multipl the square footage by $2.50 to determine the bid price. Since our average cost is only $2.155 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 control Activity Measure Total activity Removing asbestos Thousands of square feet 1,000 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 ale capacity conto) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup Coata for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost 5 328,000 706,000 90,000 53,000 230,000 430,000 51.837,000 Distribution of resource consumption across Activi Estimating Working on Hemoving and Job Nonroutine Asbestos Setup Jobs Wages and salaries 601 100 201 Disposal fees 601 03 405 Equipment depreciation 401 50 201 On-site applies 100 201 101 office expenses 105 350 251 Licensing and insurance 350 00 50 Other 104 01 351 ON 301 158 Total 1001 1001 1008 1001 1008 100 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 multipl the square footage by $2.50 to determine the bid price. Since our average cost is only $2.155 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 control Activity Measure Total activity Removing asbestos Thousands of square feet 1,000 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 ale capacity conto) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup Coata for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost 5 328,000 706,000 90,000 53,000 230,000 430,000 51.837,000 Distribution of resource consumption across Activi Estimating Working on Hemoving and Job Nonroutine Asbestos Setup Jobs Wages and salaries 601 100 201 Disposal fees 601 03 405 Equipment depreciation 401 50 201 On-site applies 100 201 101 office expenses 105 350 251 Licensing and insurance 350 00 50 Other 104 01 351 ON 301 158 Total 1001 1001 1008 1001 1008 100

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