Vance Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. The company's estimator has been involved in a long-simmering dispute with the on-site work supervisors. The on-site supervisors claim that the estimator does not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in older homes, and non-routine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that non-routine 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 metres by $4,200 per thousand square metres to determine the bid price. Since our average cost is only $3,200 per thousand square metres, that leaves enough cushion to take care of the additional costs of non-routine 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 ABC study of all of its costs. Data from the ABC system follow: Activity Cost Pool Removing asbestos Estimating and job setup Working on non-routine jobs Other (costs of idle capacity and organization-sustaining costs) Activity Measure Total Activity Thousands of square metres 500,000 m Number of jobs 250 jobs* Not applicable; these costs are not allocated to jobs. Number of non-routine jobs 25 non-routine jobs *The total number of jobs includes non-routine jobs as well as routine jobs. Non-routine jobs as well as routine jobs require estimating and setup work. Wages and salaries $ 220,000 Disposal fees 630,000 Equipment depreciation 86,000 On-site supplies 64,000 Office expenses 206,000 Licensing and insurance 394,000 Total cost $1,600,000 Distribution of Resource Consumption across Activity Cost Pools Removing Estimating and Working on Non- Asbestos Job Setup routine Jobs Other Wages and salaries Total 45% 10% 30% 15% 100% Disposal fees 70% 0% 30% 0% 100% Equipment depreciation 40% 0% 35% 25% 100% On-site supplies 55% 15% 25% 5% 100% Office expenses 10% 40% 35% 15% 100% Licensing and insurance 50% 0% 40% 10% 100%