NET ts Book 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 $4.900 per thousand square metres to determine the bid price. Since our average cost is only $3,900 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 cont Pool Activity Measure Totale Activity Removing asbestos Thousands of square metres 500,000 ? Estimating and job setup Number of jobs 300 Jobs Working on non-routine joba Number of non-routine Jobs 25 non-routine joba Other (costs of tale capacity and Not applicable these coats are not organization-sustaining costs) allocated to jobs. eferences * The total number of jobs includes non-routine jobs as well as routine jobs. Non-routine jobs as well as routine jobs inquire estimating and setup work. Wages and salaries Disposal fees Equipment depreciation On-site supplies ottice expenses Licensing and insurance $ 290,000 735,000 107.000 78,000 262,000 478,000 51.950,000 Total cont Distribution of Resource Consumption across Activity Cost Pools Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Removing Asbestos 454 701 40 55 10 500 Estimating and Job Setup 104 Os ON 150 408 OR Working on Non-routine Jobs 305 30 350 25$ Other 150 08 250 5 151 100 Total 1003 1000 1001 1000 1001 100 351 400 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 is required.) Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance Total cost Removing Estimating Working on Asbestos and Job Non-routine Other Totals Setup Jobs $ 130,500 $ 29,000 $ 87.000 $ 43,500 $ 290,000 514,500 0 220,500 0 735,000 42,800 0 37.450 26,750 107.000 42,900 11,700 19,500 3,900 78,000 26,200 104,800 91,700 39,300 262.000 239.000 O 191,200 47.800 478,000 $ 995,900 $ 145,500 $ 647,350 $ 161.250 S 1,950,000 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Removing asbestos Estimating and job setup Working on non-routine jobs Activity Rate per thousand square metres 485.00 per job $ 25,894.00 per non-routine job $ ces 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand squaren 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.) Total cost of the job Average cost per thousand square metres b. A routine 2,000-square-metre asbestos removal job. (Round your answers to 2 decimal places.) Total cost of the job Cost per thousand square metres c. A non-routine 1,000-square metre asbestos removal job. (Round your answers to 2 decimal places.) Total cost of the job Cost per thousand square metres