Mercer Asbestos Removal Company removes potentially toxic asbestos Insulation and related products from bulldings. 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 celling plaster in industrial buildings. The on-site supervision 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 $3.00 to determine the bid price. Since our average cost is only $2.675 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 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 (organization-sustaining costs and idle capacity costs) None 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 423,000 802,000 96,000 62,000 320,000 510,000 $ 2,213,000 Help Save Distribution of Resource Consumption across Activities Estimating Working on Removing and JobMonroutine Asbestos Setup Jobs Wages and salaries 506 100 Disposal fees 708 300 Equipment depreciation 50% 10 158 On-site supplies 606 300 office expenses 256 Licensing and insurance 258 600 other Total 1008 1005 1005 1001 108 1000 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. 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 Reg 3A to 30 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. ent 3:Activity Based Costing 0 Saved c. A nonroutine 2,000-square-foot asbestos removal Job. Complete this question by entering your answers in the tabs below. Red 1 Req 2 Req 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 Other Total Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost OOOOO Reg 2 > Req 1 eBook Req 2 Req 3A to 3C Print Compute the activity rates for the activity cost pools. References Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs Activity Rate per thousand square feet per job per nonroutine job Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A to 30 pped Using the activity rates you have computed, determine the total cost and the average cost of the following jobs according to the activity-based costing system. (Round the "Average 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. Book rint rences Routine 1,000 sq. ft. job Routine 2,000 sq. ft. job Nonroutine 2,000 sq. ft. job Total cost of the job Average Cost per thousand square feet Reg 3A te 30