I am resubmitting this as the guidance I received for question 3. A/B/C is incorrect.
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company’s estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work such as removal of asbestos insulation around heating pipes in older homes and nonroutine work such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine 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 footage by $2.80 to determine the bid price. Since our average cost is only $2.58 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart.”
To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow:
|Activity Cost Pool||Activity Measure||Total Activity|
|Removing asbestos||Thousands of square feet||850||thousand squarefeet|
|Estimating and job setup||Number of jobs||400||jobs|
|Working on nonroutine jobs||Number of nonroutine jobs||100||nonroutine jobs|
|Other (costs of idle capacity and
Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup.
|Costs for the Year|
|Wages and salaries||$||400,000|
|Licensing and insurance||500,000|
Distribution of Resource Consumption Across Activities
|Removing Asbestos||Estimating and Job Setup||Working on Nonroutine Jobs||Other||Total|
|Wages and salaries||60||%||10||%||20||%||10||%||100||%|
|Licensing and insurance||30||%||0||%||50||%||20||%||100||%|
1. Perform the first-stage allocation of costs to the activity cost pools.
2. Compute the activity rates for the activity cost pools.
3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the "Average cost" to 2 decimal places.)
a. A routine 1,000-square-foot asbestos removal job.
b. A routine 2,000-square-foot asbestos removal job.
c. A nonroutine 2,000-square-foot asbestos removal job.
Perform the first-stage allocation of costs to the activity cost pools as follows:
Our solutions are written by experts, many with advanced degrees, and available 24/7See Solution
Q: The year end balance sheet of CP, In., include the following stockholders’ equity section (with cert...
A: Stockholders’ equity: The claims of owners on a company’s resources, after the liabilities are paid ...
Q: KE uses a perpetual inventory system. The following are three recent merchandise transactions. Apr....
A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the invent...
Q: Stratus Inc. purchased equipment for $18,500 and received an invoice with terms 4/10, 3/30, n/45. If...
A: Stratus Incorporation purchased equipment and it had terms 4/10, 3/30, n/45. In this case, the compa...
Q: I am looking for help with question 4 and 5. The Walton Toy Company manufactures a line of dolls a...
A: 4. Calculate the contribution margin with the constrained resource.
Q: The following properties have been owned by a business for more than one year. Which of them would ...
A: 1231 property includes:Livestock held for draft, breeding, dairy, or sporting purposesDepreciable or...
Q: 2. To prepare for the construction of its new headquarters, ABC company purchased a 500-acre plot of...
A: Section 835 of FASB Accounting standards codification relates to Interest. Section 835-20 relates to...
Q: Many businesses borrow money during periods of increased business activity to finance inventory and ...
A: When Cash is recieved against promissory note, an asset is received and a liability is created. when...
Q: Brief Exercise 15-10Sweet Inc. declared a cash dividend of $2.2 per share on its 5 million outstandi...
A: Journal: Journal is the method of recording monetary business transactions in chronological order. I...
Q: Sandhill Co. sold $5,325,000, 9%, 15-year bonds on January 1, 2017. The bonds were dated January 1, ...
A: Bonds are generally long-term debt. The company issue bonds for investment purpose and paid interest...
Sorry about that. What wasn’t helpful?