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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

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

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
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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