Beaumont Specialty Chemicals, Inc. (BSC), is a manufacturer of specialty chemicals sold to manufacturers, hospitals, and other users. BSC produces about one million gallons of its main product BSC-22 each month. The data for BSC-22 for July follows. The chemical raw materials are added at the beginning of processing.

Beginning work-in-process inventory (60% complete for conversion;

materials $55,000, conversion $7,250) ...................................200,000 gallons

Units started................................................................1,200,000 gallons

Good units finished (no spoilage)...........................................900,000 gallons

Ending work-in-process inventory (50% complete for conversion).... 500,000 gallons

Current manufacturing costs for BSC-22

Materials..............................................................................185000

Conversion..............................................................................75400

Each month BSC averages 100 batches of BSC-22 with approximately 12,000 gallons per batch. The pattern of customer orders is that large orders come in at all times of the month, while small orders tend to cluster around the last few days of the month. The small orders are due to salespersons trying to meet monthly sales quotas and the buying patterns of smaller customers who want their shipments early in the following month. As a result, in the average month three-fourths of the total orders are started in the last few days of the month, and most are not completed until early in the following month. For example, in July, 100 batches were in process, and 70 were still in the ending work-in-process inventory at the end of the month. Ted Brown, plant controller for BSC, thinks that the current costing method, using weighted average process costing, underestimates the cost of the ending work-in-process inventory as well as the cost of smaller jobs.