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 and one Job In BThere Is never any beginning or ending work In
process at Bouwens. Recently, a dlspute 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 has highcost labor is because all the senlor employees want to work there. We could produce the same product with the
employees in B 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 their 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 MSolv and CSolv for July using the current system Job costing at Bouwens.
b Compute the costs of MSolv and CSolv for July If Bouwens were to treat all production as the same combining B and B
production
c Recommend a costing method that best reflects the cost of producing MSolv and CSolv.
d For your recommended costing system, compute the cost of both MSolv and CSolv for July.
Compute the unlt costs for materlals and conversion costs separately.
Then compute conversion costs for the factory.
Now, compute the unit product cost.
Complete this question by entering your answers in the tabs below.
Compute the unit costs for materials and conversion costs separately.
