MetaMetaCurrently, 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 milltary solvent, and Jill, the product

manager for the commerclal 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 senlor 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 bulldings for each month as the

batch.

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

thelr business. If we don't separate the costing, we won't know how profitable elther business Is$.$

The following is production and cost Information for a typical month, July.

Requlred:

a$.$ Compute the unlt 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.

Compute the unit costs for materlals and conversion costs separately.

Then compute conversion costs for the factory.

Now, compute the unit product cost.

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