Jayzee Company manufactures a variety of products in a variety of depart- ments and evaluates departments and departmental managers by comparing actual cost and output rela- tive to the budget. Departmental managers help create the budgets and usually provide information about input quantities for materials, labor, and overhead costs. Kurt Jackson is the manager of the department that produces product Z. Kurt has estimated these inputs for product Z: Input Budget Quantity per Unit of Output Direct material 8 pounds Direct manufacturing labor 30 minutes Machine time 24 minutes The department produces about 100 units of product Z each day. Kurt's department always gets excellent evaluations, sometimes exceeding budgeted production quantities. For each 100 units of product Z pro- duced, 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 Jayzee Company has decided to implement budget standards that will challenge the workers in each department, and it has asked Kurt to design more challenging input standards for prod- uct Z. Kurt provides top management with the following input quantities: Input Budget Quantity per Unit of Output 7.9 pounds Direct material Direct manufacturing labor 29 minutes Machine time 23.6 minutes
Jayzee Company manufactures a variety of products in a variety of depart- ments and evaluates departments and departmental managers by comparing actual cost and output rela- tive to the budget. Departmental managers help create the budgets and usually provide information about input quantities for materials, labor, and overhead costs. Kurt Jackson is the manager of the department that produces product Z. Kurt has estimated these inputs for product Z: Input Budget Quantity per Unit of Output Direct material 8 pounds Direct manufacturing labor 30 minutes Machine time 24 minutes The department produces about 100 units of product Z each day. Kurt's department always gets excellent evaluations, sometimes exceeding budgeted production quantities. For each 100 units of product Z pro- duced, 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 Jayzee Company has decided to implement budget standards that will challenge the workers in each department, and it has asked Kurt to design more challenging input standards for prod- uct Z. Kurt provides top management with the following input quantities: Input Budget Quantity per Unit of Output 7.9 pounds Direct material Direct manufacturing labor 29 minutes Machine time 23.6 minutes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Q.Are these budget standards challenging for the department that produces product Z?
Transcribed Image Text:Jayzee Company manufactures a variety of products in a variety of depart-
ments and evaluates departments and departmental managers by comparing actual cost and output rela-
tive to the budget. Departmental managers help create the budgets and usually provide information about
input quantities for materials, labor, and overhead costs.
Kurt Jackson is the manager of the department that produces product Z. Kurt has estimated these
inputs for product Z:
Input
Budget Quantity per Unit of Output
Direct material
8 pounds
Direct manufacturing labor
30 minutes
Machine time
24 minutes
The department produces about 100 units of product Z each day. Kurt's department always gets excellent
evaluations, sometimes exceeding budgeted production quantities. For each 100 units of product Z pro-
duced, 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 Jayzee Company has decided to implement budget standards that will challenge
the workers in each department, and it has asked Kurt to design more challenging input standards for prod-
uct Z. Kurt provides top management with the following input quantities:
Input
Budget Quantity per Unit of Output
7.9 pounds
Direct material
Direct manufacturing labor
29 minutes
Machine time
23.6 minutes
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