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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Q.What steps can Jayzee Company’s top management take to make sure Kurt’s standards really meet the goals of the firm?
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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