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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 Mercer Asbestos estimators do not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in old h as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors k and should bear higher customer charges. The estimator sums homes, and nonroutine work, suc believe that nonroutine work is far more expensive than routine wor 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 $3.60 to determine the bid price. Since our average cost is only $2.775 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 initioted an activity-based costing study of all of its costs. Data from the activity-based costing system follow es tivky Cost Pool Removing asbestos Estinating and job setup Working on nonroutine jobn Other (organization-sustaining costs Activity Measure Total Activit Thousands of square feet Number of jobs Number of nonroutine jobs 800 thousand square feet 400 jobr 100 nonroutine jobs and idle capacity coets) Note: The 100 nonrout ine jobs are ineluded in the total of 400 jobs. Both nonroutine jobe and routine jobs require estimating and Bet up. None Costs for the Year Mages and salaries Disposal fees quipment depreciation On-site supplie8 office expenses Licensing and insurance Total cost $ 480,000 882,000 108,000 68,000 380,000 580,000 2,498,000

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