Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a long-simmering dispute between the company's estimator and the work supervisors. The on-site supervisors claim the estimators do not adequately distinguish between routine work, such as removing 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 nonroutine work is for 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 $3.20 to determine the bid price. Because our average cost is only $2.805 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work. 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 gathered the following activity-based costing date: Activity Cost Pool Removing asbestos Working on nonroutine jobs Estimating and job setup Other (organization-sustaining costs and idle capacity costs) Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs None Total Activity 850 thousand square feet 400 jobs 100 nonroutine jobs Note: The 100 nonroutine jobs are included in the total of 400 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 Licensing and insurance Total cost $440,000 824,000 188,000 64,000 340,000 540,000 $ 2,316,000 Distribution of Resource Consumption Across Activities Removing Asbestos Estimating and Job Working on Nonroutine Setup Jobs Other Total Wages and salaries 58% 18% 30% 10% 100% Disposal fees 78% ex 30% 0% 100% Equipment depreciation 48% 5% 20% 35% 100% On-site supplies 68% 38% 10% 0% 100% office expenses 15% 35% 20% 30% 100% Licensing and insurance 38% ex 60% 10% 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. Calculate 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. Required 1 Required 2 Required 3A to Perform the first-stage allocation of costs to the activity cost pools. Removing asbestos Estimating and Job Setup Working on Nonroutine Jobs Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost S 0 S < Required 1 Other Total 0 0 0 0 0 0 $ $ 0 S 0 Required 2 >