Solution 1:
First stage allocation of cost to activity cost pools | |||||||||
Particulars | Total Cost | Removing Asbestos | Estimating and Job Setup | Working on non routine job | Others | ||||
% | Amount | % | Amount | % | Amount | % | Amount | ||
Wages & Salaries | $450,000.00 | 60% | $270,000.00 | 10% | $45,000.00 | 20% | $90,000.00 | 10% | $45,000.00 |
Disposal Fees | $820,000.00 | 60% | $492,000.00 | 0% | $0.00 | 40% | $328,000.00 | 0% | $0.00 |
Equipment depreciation | $110,000.00 | 40% | $44,000.00 | 5% | $5,500.00 | 25% | $27,500.00 | 30% | $33,000.00 |
On Site Supplies | $65,000.00 | 70% | $45,500.00 | 20% | $13,000.00 | 10% | $6,500.00 | 0% | $0.00 |
Office Expenses | $350,000.00 | 10% | $35,000.00 | 40% | $140,000.00 | 15% | $52,500.00 | 35% | $122,500.00 |
Licensing and Insurance | $550,000.00 | 25% | $137,500.00 | 0% | $0.00 | 60% | $330,000.00 | 15% | $82,500.00 |
Total | $2,345,000.00 | $1,024,000.00 | $203,500.00 | $834,500.00 | $283,000.00 |
Solution 2:
Determination of activity rate for each activity | ||||
Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate |
Removing Asbestos | $1,024,000.00 | Thousand of Square Feet | 800 | $1,280.00 |
Estimating and Job Setup | $203,500.00 | Number of Jobs | 500 | $407.00 |
Working on non routine job | $834,500.00 | Number of non routine jobs | 100 | $8,345.00 |
Other | $283,000.00 | No allocation | ||
Total | $2,345,000.00 |
Solution 3a:
Computation of total cost and average cost per thousand square feet - Routine 1000 Square feet job | |
Particulars | Amount |
Removing Asbestos | $1,280.00 |
Estimating and Job Setup | $407.00 |
Total cost of job | $1,687.00 |
Average cost per thousand square feet | $1,687.00 |
Solution 3b:
Computation of total cost and average cost per thousand square feet - Routine 2000 Square Foot job | |
Particulars | Amount |
Removing Asbestos | $2,560.00 |
Estimating and Job Setup | $407.00 |
Total cost of job | $2,967.00 |
Average cost per thousand square feet | $1,483.50 |
Solution 3c:
Computation of total cost and average cost per thousand square feet - Non routine 2000 Square foot job | |
Particulars | Amount |
Removing Asbestos | $2,560.00 |
Estimating and Job Setup | $407.00 |
Working on non routine job | $8,345.00 |
Total cost of job | $11,312.00 |
Average cost per thousand square feet | $5,656.00 |
Problem 7-18 Activity-Based Costing and Bidding on Jobs (L07-2, L07-3, L07-4] Mercer Asbestos Removal Company removes p...
Problem 7-18 Activity-Based Costing and Bidding on Jobs [LO7-2, L07-3, L07-4] 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...
Problem 7-18 Activity-Based Costing and Bidding on Jobs (L07-2, LO7-3, LO7.4) 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...
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...
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...
ULI. PROBLEM 7-18 Activity-Based Costing and Bidding on Jobs LO7-2, L07-3, LO7-4 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 estima tor 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 Activity-Based Costing:...
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...
Activity-Based Costing and Bidding on Jobs 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 estima- tor 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...
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...
1.34 points 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...
Mercer Asbestos Removal Company removes potentially toxic asbestos Insulation and related products from bulldings. 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 celling plaster in industrial buildings. The on-site supervision believe that nonroutine work is far more expensive than routine...