In: Accounting
Chapter 7 - problem 18
Activity cost Pool Activity Measure Total Activity
Removing asbestos ………………. Thousands of square feet 800 thousand square feet
Equipment and job steps…………. Number of jobs 500 jobs
Working on nonroutine jobs………. Number of jobs nonroutine jobs 100 nonroutine jobs
Other organization-sustaining costs and idle capacity costs …………… None
Note The 100 nonrountine jobs are included in the total of 500 jobs. Both nonroutine jobs and routine jobs require estimating and steps.
Cots for the Year
Wages and salaries ……………………………………………… $300,000
Disposal fees ……………………………………………………… 700,000
Equipment depreciation …………………………………………. 90,000
One-site suppliers ………………………………………………… 50,000
Office expenses …………………………………………………… 200,000
License and insurance ……………………………………………. 400,000
Total cost …………………………………………………………… 51,740,000
Distribution of Resource Consumption across Activities
Estimating Working on
Removing and job steps Nonroutine jobs
Asbestos other Total
Wages and salaries 50% 10% 30% 10% 100%
Disposal fees 60% 0% 40% 0% 100%
Equipment depreciation 40% 5% 20% 35% 100%
One-site suppliers 60% 30% 10% 0% 100%
Office expenses 10% 35% 25% 30% 100%
License and insurance 30% 0% 50% 20% 100%
Require