Discuss the following: a. Are these budget standards challenging for the department that produces lip gloss? (Use the numbers provided to support your argument) b. Why do you suppose Chante picked these standards? (Critical thinking) c. What steps can Nicki Fenty Corporation’s top management take to ensure Chante’s standards really meet the goals of the firm? Discuss this briefly, with reference to the current scenario as well as to other approaches to budget preparation.
Discuss the following: a. Are these budget standards challenging for the department that produces lip gloss? (Use the numbers provided to support your argument) b. Why do you suppose Chante picked these standards? (Critical thinking) c. What steps can Nicki Fenty Corporation’s top management take to ensure Chante’s standards really meet the goals of the firm? Discuss this briefly, with reference to the current scenario as well as to other approaches to budget preparation.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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Question
Discuss the following:
a. Are these budget standards challenging for the department that produces lip gloss?
(Use the numbers provided to support your argument)
b. Why do you suppose Chante picked these standards? (Critical thinking)
c. What steps can Nicki Fenty Corporation’s top management take to ensure Chante’s
standards really meet the goals of the firm? Discuss this briefly, with reference to
the current scenario as well as to other approaches to budget preparation.
![Nicki Fenty Corporation manufactures a variety of beauty products in several departments and
evaluates departments and departmental managers by comparing actual cost and output relative to
the budget. Departmental managers help create the budgets and usually provide information about
input quantities for materials, labor, and overhead costs.
Chante Moore is the manager of the department that produces lip gloss. Chante has estimated
these inputs for Lip gloss:
Budget quantity per unit of output
8 pounds
Input
Direct materials
Direct manufacturing labour
30 minutes
Machine time
24 minutes
The department produces about 100 units of lip gloss each day. Chante's department always gets
excellent evaluations, sometimes exceeding budgeted production quantities. For each 100 units of
lip gloss produced, the company uses, on average, about 48 hours of direct manufacturing labor
(eight people working 6 hours each), 790 pounds of material, and 39.5 machine-hours.
Top management of Nicki Fenty Corporation has decided to implement budget standards that
will challenge the workers in each department, and it has asked Chante to design more challenging
input standards for the production of lip gloss. Chante provides top management with the following
input quantities:
Budget quantity per unit of output
7.9 pounds
29 minutes
Input
Direct materials
Direct manufacturing labour
Machine time
23.6 minutes](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a4a0bce-2dfb-4c66-b655-11a60bcce410%2F7ee77653-b96a-4676-941f-2f8e0ba115b3%2Fxt5vsnl_processed.png&w=3840&q=75)
Transcribed Image Text:Nicki Fenty Corporation manufactures a variety of beauty products in several departments and
evaluates departments and departmental managers by comparing actual cost and output relative to
the budget. Departmental managers help create the budgets and usually provide information about
input quantities for materials, labor, and overhead costs.
Chante Moore is the manager of the department that produces lip gloss. Chante has estimated
these inputs for Lip gloss:
Budget quantity per unit of output
8 pounds
Input
Direct materials
Direct manufacturing labour
30 minutes
Machine time
24 minutes
The department produces about 100 units of lip gloss each day. Chante's department always gets
excellent evaluations, sometimes exceeding budgeted production quantities. For each 100 units of
lip gloss produced, the company uses, on average, about 48 hours of direct manufacturing labor
(eight people working 6 hours each), 790 pounds of material, and 39.5 machine-hours.
Top management of Nicki Fenty Corporation has decided to implement budget standards that
will challenge the workers in each department, and it has asked Chante to design more challenging
input standards for the production of lip gloss. Chante provides top management with the following
input quantities:
Budget quantity per unit of output
7.9 pounds
29 minutes
Input
Direct materials
Direct manufacturing labour
Machine time
23.6 minutes
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