Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens sells the solvent to both U$.$S$.$ military

services and commercial airlines. The solvent is produced in a single plant in one of two buildings. Although the solvent sold to the

military is chemically identical to that sold to the airlines, the company produces solvent for the two customer types in different buildings

at the plant. The solvent sold to the military is manufactured in building $155($B$-155)$ and is labeled M$-$Solv. The solvent sold to the

commercial airlines is manufactured in building $159($B$-159)$ and is labeled C$-$Solv.

B$-155$ is much newer and is considered a model work environment with climate control and other amenities. Workers at Bouwens, who

all have roughly equal skills, bid on their job locations $($the buildings they will work in$)$ and are assigned based on bids and seniority$.$ As

workers gain seniority$,$ they also receive higher pay.

The solvent sold to the two customers is essentially identical, but the military requires Bouwens to use a base chemical with a brand

name, MX$.$ The solvent for the commercial airlines is called CX$.$ MX is required for military applications because it is sold by vendors on

a preferred vendor list.

The company sells solvent for the market price to the airlines. Solvent sold to the military is sold based on cost plus a fixed fee. That is$,$

the government pays Bouwens for the recorded cost of the solvent plus a fixed amount of profit. The cost can be computed according to

"commonly used product cost methods, including job costing or process costing methods using either FIFO or weighted$-$average

methods." Competition for the government business is very strong, and Bouwens is always looking for ways to reduce the cost and the

price it quotes the government.

Currently, Bouwens uses a job costing system in which each month's production for each customer type is considered a "job." Thus,

every month, Bouwens starts and completes one job in B$-155$ and one job in B$-159.($There is never any beginning or ending work in

process at Bouwens.$)$ Recently, a dispute arose between Jack, the product manager for the military solvent, and Jill, the product manager

for the commercial solvent, over the proper costing system.

Jack: It is ridiculous to use job costing for this. We are producing solvent. Everyone knows that the chemicals are the same. The fact

the B$-155$ has high$-$cost labor is because all the senior employees want to work there. We could produce the same product with

the employees in B$-159.$ We should be using process costing and consider all the production in both buildings for each month as

the batch.

Jill: Jack, the fact is that the military requires us to use a special chemical, and their contracts require we keep track of the costs for

their business. If we don't separate the costing, we won't know how profitable either business is$.$

The following is production and cost information for a typical month, July:

Required

a$.$ Compute the unit costs of M$-$Solv and C$-$Solv for July using the current system $($job costing$)$ at Bouwens.

b$.$ Compute the costs of M$-$Solv and C$-$Solv for July if Bouwens were to treat all production as the same $($combining B$-155$

and B$-159$ production$).$

c$.$ Recommend a costing method that best reflects the cost of producing M$-$Solv and C$-$Solv.

d$.$ For your recommended costing system, compute the cost of both M$-$Solv and C$-$Solv for July.