Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 osbestos 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 expenslve than routine work and should beor higher customer charges. The estimator sums up his position in this way. "My job is to measure the area to be cleared of osbestos. As directed by top management, I simply multiply the square metres by $4,000 per thousand square metres to determine the bid price. Since our average cost is only $3,000 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: - 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. Requirect. 1. Perform the first-stage allocation of costs to the activity cost pools. (Do not leave any empty spaces; input a 0 wherever it i required.) 2. Comoute the activitv rates for the activitv cost nools (Round vour answers to 2 decimal olaces.) 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square metres of each of the following jobs according to the ABC system: a. A routine 1,000-square-metre asbestos removal job (Round your answers to 2 decimal places.) b. A routine 2,000 -square-metre osbestos removal job. (Round your answers to 2 decimal places.) a. A routine 1,000-square-metre asbestos removal job. (Round your answers to 2 decimal places.) b. A routine 2,000-square-metre asbestos removal job. (Round your answers to 2 decimal places.) c. A non-routine 1,000 -square-metre asbestos removal job. (Round your answers to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt

5th edition

132567237, 978-0132998345, 132998343, 978-0132567237

More Books

Students also viewed these Accounting questions

Question

Explain how the different models of memory work.

Answered: 1 week ago

Question

Define Decision making

Answered: 1 week ago

Question

What are the major social responsibilities of business managers ?

Answered: 1 week ago

Question

What are the skills of management ?

Answered: 1 week ago