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 $$4,600$ per thousand square metres to determine the bid price. Since our average cost is only $$3,600$ 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 Activity Measure Total Activity

Removing asbestos Thousands of square metres $500,000$ m$2$

Estimating and job setup Number of jobs $220$ jobs$*$

Working on non$-$routine jobs Number of non$-$routine jobs $25$ non$-$routine jobs

Other $($costs of idle capacity and organization$-$sustaining costs$)$ Not applicable; these costs are not allocated to 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 $ $260,000$

Disposal fees $690,000$

Equipment depreciation $98,000$

On$-$site supplies $72,000$

Office expenses $238,000$

Licensing and insurance $442,000$

Total cost $ $1,800,000$

Distribution of Resource Consumption across

Activity Cost Pools

Removing Asbestos Estimating and Job Setup Working on Non$-$routine Jobs Other Total

Wages and salaries $40\%10\%35\%15\%100\%$

Disposal fees $75\%0\%25\%0\%100\%$

Equipment depreciation $45\%0\%40\%15\%100\%$

On$-$site supplies $50\%15\%25\%10\%100\%$

Office expenses $10\%40\%30\%20\%100\%$

Licensing and insurance $50\%0\%45\%5\%100\%$

Required:

$1.$ Perform the first$-$stage allocation of costs to the activity cost pools. $($Do not leave any empty spaces; input a $0$ wherever it is required.$)$

$2.$ 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 $2,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$

b$.$ A routine $4,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$

c$.$ A non$-$routine $2,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$

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 $2,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$

b$.$ A routine $4,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$

c$.$ A non$-$routine $2,000-$square$-$metre asbestos removal job. $($Round your answers to $2$ decimal places.$)$