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 as 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 ob is to measure the area to be cleared of asbestos. As directed by top management, l simply multiply the square footage by $2.50 to determine the bid price. Since our average cost is only $2.01 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. minated ceiling plaster in industrial buildings. The on-site supervisors To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based Removing asbestos Estinating and job setup Working on nonroutine jobs Other (organization-sustaining costs Number of joba Number of nonroutine jobs 400 jobs 100 nonroutine jobs and idle capacity costs) Note: The 100 nonroutine jobs are included in the total of 400 joba. Both nonroutine jobs and routine jobs require estimating and setup. Wages and salaries 308,000 706,000 90,000 50,000 210,000 410,000 $ 1,774,000 fees Equipment depreciation Distribution of Consumption Across Activities