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 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 $3.10 to determine the bid price. Because our average cost is only $2.855 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 data: Activity Cost Pool Removing asbestos Activity, Measure Thousands of square feet Number of jobs Number of non routine jobs Estimating and job setup Working on nonroutine jobs Other (organization-sustaining costs and idle capacity costs) None Total Activity 800 thousand square feet 500 jobs 100 nonroutine jobs 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 Licensing and insurance Total cost $ 450,000 820,000 110,000 65,000 350,000 550,000 $ 2,345,000 Distribution of Resource Consumption Across Activities Distribution of Resource Consumption Across Activities Removing Asbestos Estimating Working on and Job Nonroutine Setup Jobs Other Total Wages and salaries 60% 10% 20% 10% 100% Disposal fees 60% 0% 40% 0% 100% Equipment depreciation 40% 5% 25% 30% 100% On-site supplies 70% 20% 10% 0% 100% Office expenses 10% 40% 15% 35% 100% Licensing and insurance 25% 0% 60% 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. 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 3C 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 Other Total