0 Mercer Asbestos Removal Company removes potentialily toxkic asbestos insulatio

Question

0 Mercer Asbestos Removal Company removes potentialily toxkic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company's estimator and the work of asbestos insulation around heating pipes in older homes and nonroutine work supervisors. The such as removing asbestos-contaminated celing plaster in industrial buildings. The on-site supervisors believe t The estimator sums up his position in this way: "My job is to measure the area to be cleared of asbestos. As Since our average cost is only $2.90 per square foot, that leaves you actuaily start tearing things apart on-site supervisors claim that the estimators do not adequately distinguish between routine work such as nemoval that nonroutine work is far more expensive than routine work and should bear higher customer charges directed by top management, I simply mutiply the square footage by $4.20 to debermine the bid price of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routne unti To shed ight on this controversy, the company initated an activity-based c costing study of all of its costs. Data from the activity-based costing system follow Estimating and job sehup Working on nonroutine jobs Other (oosts of idle capacity and Thousands of square feet Number ef jobs Number of nonoutine jobs 500 housand squarefeet 400 100 nonoutine jobs None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both noneoutine jobs and routine jobs require estimasing and setup. Costs for the Wages and saiaries 431,000 13,000 104,000 63,000 On-site supplies Office expenses Lcensing and insurance 30,000 Distribution of Resource Consumption Across Acivities Working on Removing Estimating and Nonroutine Asbestos Job Setup Oter 10% Total Wages and salaries 100% Disposal fees On-ste supples Licensing and insurance 10% 20% 70% 10% 20% 25% 60% 30%

Explanation / Answer

Solution:

1) Performing the First Stage Allocation of Costs to the Activity Cost Pools:

2) Calculation of the Activity Rates for the Activity Cost Pools:

3) Determining the Total Cost and Average Cost Per Thousand Square Feet of each of the Following Jobs according to the Activity Based Costing System:

a. Routine one thousand square foot job:

b. Routine Two thousand square foot job:

c. NonRoutine Two thousand square foot job:

Job Size Estimating and Job Setup Working on Nonroutine Jobs Other Totals Wages and salaries ($431,000 * 60%) = $258,600 ($431,000 * 10%) = $43,100 ($431,000 * 20%) = $86,200 ($431,000 * 10%) = $43,100 $431,000 Disposal fees ($713,000 * 60%) = $427,800 ($713,000 * 0%) = $0 ($713,000 * 40%) = $285,200 ($713,000 * 0%) = $0 $713,000 Equipment depreciation ($104,000 * 50%) = $52,000 ($104,000 * 10%) = $10,400 ($104,000 * 15%) = $15,600 ($104,000 * 25%) = $26,000 $104,000 On-site supplies ($63,000 * 70%) = $44,100 ($63,000 * 20%) = $12,600 ($63,000 * 10%) = $6,300 ($63,000 * 0%) = $0 $63,000 Office expenses ($330,000 * 10%) = $33,000 ($330,000 * 35%) = $115,500 ($330,000 * 25%) = $82,500 ($330,000 * 30%) = $99,000 $330,000 Licensing and insurance ($530,000 * 20%) = $106,000 ($530,000 * 0%) = $0 ($530,000 * 50%) = $265,000 ($530,000 * 30%) = $159,000 $530,000 Total cost $921,500 $181,600 $740,800 $327,100 $2,171,000

Related Questions

Navigate

• Browse (All)
• Browse
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.