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 lob is to measure the area to be cleared of asbestos. As directed by top management. I simply multiply the square footage by $3.10 to determine the bid price. Since our average cost is only $2,855 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 300 thousand square feet Estimating and job setup Number of Jobs 500 jobs Working on nonroutine jobs Number of nonroutine jobs 100 nonroutine Jobs Other (organization sustaining costs and idle capacity costs) Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both nonroutine Jobs and routine Jobs require estimating and setup None Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office wpenses Licensin and insurance Total cost 5 450,000 320,000 110,000 65.000 350,000 550,000 52,345,000 Distribution of Resource Consumption Across Activities Removing Estimating and Working on Asbestos Job Setup Nonroutine Jobs Wages and salaries 60% 10% 20% Disposal fees 60% ex 4ex Equipment 4ex 5% 25% depreciation On-site supplies 70% 20% 10% Office expenses 10x 40% 15% Licensing and 25% ex insurance ex Other Total 10% 100% ex 100% 38x 100% YOOX 35% 100% 15% 100% 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 1000-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. Regi Req2 Reg JA to ac Perform the first stage allocation of costs to the activity cost pools Estimating Working on Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req 3A to 30 Total Perform the first-stage allocation of costs to the activity cost pools. Removing Estimating Working on and Job Nonroutine Other asbestos Setup Jobs Wages and salaries $450,000 $ 45,000 S 45,000 $ 450,000 Disposal fees 820,000 0 0 X 820,000 Equipment depreciation 5,500 5,500 33,000 110,000 On-site supplies 13,000 X 13.000 0% 65,000 Office expenses 140,000 140,000 122,500 350.000 Licensing and insurance 330.000 330,000 550,000 0 Total cost $ 1,758,500 $ 533,500 IS 750,500 $ 1,795,000 % s 990,000 1,640,000 154,000 91,000 752,500 1,210,000 $ 4,837.500 a Real Reg 2 >