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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
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a longsimmering
dispute between the company's estimator and the work supervisors. The onMercer Asbestos Removal Company removes potentlally toxic asbestos Insulation from bulldings. There has been a longsimmering
dlspute between the company's estimator and the work supervisors. The onsite supervisors claim the estimators do not adequately
distingulsh between routine work, such as removing asbestos Insulation around heating plpes in older homes, and nonroutine work,
such as removing asbestoscontaminated celling plaster in industrlal bulldings. The onsite supervisors believe 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 $ to
determine the bid price. Because our average cost is only $ 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 actlvitybased costing data:
Note: The nonroutine jobs are included in the total of jobs. Both nonroutine jobs and routine jobs require estimating and
setup.
Required:
Perform the firststage allocation of costs to the actlvity cost pools.
Compute the actlvity rates for the actlvity cost pools.
Calculate the total cost and the average cost per thousand square feet of each of the following jobs according to the activitybased
costing system.
a A routine squarefoot asbestos removal job.
b A routline squarefoot asbestos removal Job.
c A nonroutine quarefoot asbestos removal job.
Complete this question by entering your answers in the tabs below.
Perform the firststage allocation of costs to the activity cost pools.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 asbestoscontaminated ceiling plaster in industrial buildings. The onsite supervisors believe 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 $ to
determine the bid price. Because our average cost is only $ 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 activitybased costing data:
Note: The nonroutine jobs are included in the total of jobs. Both nonroutine jobs and routine jobs require estimating and
setup.
Required:
Perform the firststage allocation of costs to the activity cost pools.
Compute the activity rates for the activity cost pools.
Calculate the total cost and the average cost per thousand square feet of each of the following jobs according to the activitybased
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