Vance Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. The company's estimator has been...

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Vance Asbestos Removal Company removes potentially toxic asbestos insulation and related products frombuildings. The company's estimator has been involved in a long—simmering dispute with the on—site worksupervisors. The on-site supervisors claim that the estimator does not adequately distinguish betweenroutine work, such as removal of asbestos insulation around heating pipes in older homes, and non—routinework. such as removing asbestos—contaminated ceiling plaster in industrial buildings. The on—sitesupervisors believe that nonroutine work is far more expensive than routine work and should bear highercustomer charges. The estimator sums up his position in this way: “My job is to measure the area to becleared of asbestos. As directed by top management, I simply multiply the square metres by $4,000 perthousand square metres to determine the bid price. Since our average cost is only $3,000 per thousandsquare metres. that leaves enough cushion to take care of the additional costs of non-routine work thatshows up. Besides, it is difﬁcult to know what is routine or not routine until you actually start tearing thingsapart.” To shed light on this controversy, the company initiated an ABC study of all of its costs. Data from theABC system follow: Activity Cost Pool Activity Measure Total ActivityRemoving asbestos Thousands of square metres 500,000 m2 Estimating and job setup Number ofjobs 200 jobs“ Working on non—routine jobs Number of non—routine jobs 25 non—routine jobs Other (costs of idle capacity and Not applicable; these costs areorganization—sustaining costs} not allocated to jobs.