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 $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 Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Other (costs of idle capacity and Measure Total Activity Thousands of square feet Number of jobs Number of nonroutine jobs 800 thousand square feet 500 jobs 100 nonroutine jobs organization-sustaining costs) None Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both nonroutine jobs and routine jobs require estimating and setup Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses $ 300,000 700,000 90,000 50,000 200,000 400 n00 icensina and insurance On-site supplies Office expenses Licensing and insurance 50,000 200,000 400,000 $ 1,740,000 Total cost Distribution of Resource Consumption Across Activities Estimating Working on Job Nonroutine Removing and Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Asbestos 50% 60% 40% 60% 10% 30% Setup 10% 0% 5% 30% 35% 0% Jobs 30% 40% 20% 10% 25% 50% Other 10% 0% 35% 0% 30% 20% Total 100% 100% 100% 100% 100% 100% Required 1. Perform the first-stage allocation of costs to the activity cost pools Estimating Working on Removing Asbestos Job Setup $ 150.00 $ 30,000$ Nonroutine Jobs Other Total 30,000 $300,000 700,000 90,000 90,000$ Wages and salaries Disposal fees Equipment depreciation 420,000 280,000 4,500 18,000 31,500 36,000 30,000 300,000 700,000 90,000 50,000 200,000 400,000 $ 776,000$119,500$643,000$201,500$ 1,740,000 150,000E 30,000 Wages and salaries Disposal fees Equipment depreciatio On-site supplies Office expenses Licensing and in Total cost 420,000 36,000 30,000 20,000 120,000 90,000 280,000 18,000 5,000 50,000 200,000 31,500 4,500 15,000 70,000 60,000 surance 80,000 2. Compute the activity rates for the activity cost pools Activity Cost Pool Removing asbestos Estimating and job setup Activity Rate 1,140 per thousand square feet 412 per job orking on nonroutine jobs 7,544 per nonroutine job 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. (Round the "Average Cost per thousand square feet" to 2 decimal places.) 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. (Round the "Average Cost per thousand square feet" to 2 decimal places.) a. A routine 1,000-square-foot asbestos removal job. $ 1,552 Total cost of the job Average Cost per thousand squaeeet $ 1,552.00 b. A routine 2,000-square-foot asbestos removal job. Total cost of the job Average Cost per thousand square feet1,346.00 $ 2,692 c.A nonroutine 2,000-square-foot asbestos removal job. Total cost of the job Average Cost per thousand square feet5,118.00 $ 10,236 c. A nonroutine 2,000-square-foot asbestos removal job Total cost of the job Average Cost per thousand square feet $ 10,236 5,118.00