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 $2.80 to determine the bid price. Since our average cost is only $2.315 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 Renoving asbestos Thousands of square feet 800 thousand square feet Estimating and job setup Number of jobs 500 jobs Working on nonroutine jobs Number of nonroutine jobs 100 nonroutine jobs Other (organisation-sustaining costs and Idle capacity conta) None Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both nonroutine jobs and routine jobs require estimating and setup. Conta for the Year Hages and salaries Disposal fees Equipement depreciation On-site supplies office expenses Licensing and insurance Total cost $360,000 765,000 98,000 57,000 270.000 470,000 $ 2,020,000 Distribution of Resource Consumption across Activities Estimating Working on Removing and Job Nonroutine Asbestos Setup Job Wages and salaries 501 100 Diet for 308 700 03 100 Other 101 Total 1000 100 300 100 08 200 1001 Removing and Job Nonroutine Asbestos Setup Jobs Other Total Wages and salaries 501 101 20 1001 Disposal fees 700 00 304 08 Equipment depreciation 403 58 200 350 1001 On-site supplies 608 301 100 Office expenses 1000 152 350 Licensing and insurance 305 300 00 508 201 1001 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 8. 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. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A to 30 Compute the activity rates for the activity cost pools. Activity Cost Pool Activity Rate Removing asbestos $ 2034 200 per thousand square feet Estimating and job setup per job Working on nonroutine jobs per nonroutine job On-site supplies office expenses Licensing and insurance 601 150 305 301 358 08 100 205 501 ON 301 201 1001 100N 1009 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 1,000-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. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3A to 3C 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. b. A routine 2,000-square-foot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job. Show less Routine 1,000 Routine 2,000 square feet job square feet job Nonroutine 2,000 square feetjob Total cost of the job Average Cost per thousand square feet