controversy, the ipany initiated light of esting system follow: Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs other (organization-sustaining costs and idle capacity costs) Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost ote: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating etup. Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance equired: Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs None $ 372,000 775,000 96,000 Distribution of Resource Consumption Across Activities Estimating 58,000 280,000 480,000 $ 2,061,000 Removing Asbestos 60% 60% 50% 70% 10% 25% activity-based costing study working on and Job Nonroutine Jobs 20% 40% 15% 10% 20% 60% Setup 10% e% 10% 20% 40% e% other 10% 0% 25% 0% 30% 15% Total Activity see thousand square feet 400 jobs 100 nonroutine jobs Total 100% om the activi 100% 100% 100% 100% 100%

controversy, the ipany initiated light of esting system follow: Activity Cost Pool Removing asbestos Estimating and job setup Working on nonroutine jobs other (organization-sustaining costs and idle capacity costs) Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance Total cost ote: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating etup. Wages and salaries Disposal fees Equipment depreciation On-site supplies office expenses Licensing and insurance equired: Activity Measure Thousands of square feet Number of jobs Number of nonroutine jobs None $ 372,000 775,000 96,000 Distribution of Resource Consumption Across Activities Estimating 58,000 280,000 480,000 $ 2,061,000 Removing Asbestos 60% 60% 50% 70% 10% 25% activity-based costing study working on and Job Nonroutine Jobs 20% 40% 15% 10% 20% 60% Setup 10% e% 10% 20% 40% e% other 10% 0% 25% 0% 30% 15% Total Activity see thousand square feet 400 jobs 100 nonroutine jobs Total 100% om the activi 100% 100% 100% 100% 100%

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter16: Tax Research

Section: Chapter Questions

Problem 57DNC

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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 $3.60 to determine the bid price. Since our average cost is only $2.845 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides,…
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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 $2.70 to determine the bid price. Since our average cost is only $2.405 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides,…
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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…