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: Input Budget quantity per unit of output Direct materials 8 pounds 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: Input Budget quantity per unit of output Direct materials 7.9 pounds Direct manufacturing labour 29 minutes Machine time 23.6 minutes Required: 1. Identify the budget preparation approach used (1 mark) 2. List and briefly discuss 1 advantage and 1 disadvantage of this approach to budget preparation using the context of the example given. (2 marks) 3. Discuss the following: a. Are these budget standards challenging for the department that produces lip gloss? (Use the numbers provided to support your argument) (2 marks) b. Why do you suppose Chante picked these particular standards? (Critical thinking) ( 2 marks) 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. (3 marks)
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
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:
Input Budget quantity per unit of output
Direct materials 8 pounds
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:
Input Budget quantity per unit of output
Direct materials 7.9 pounds
Direct manufacturing labour 29 minutes
Machine time 23.6 minutes
Required:
1. Identify the budget preparation approach used (1 mark)
2. List and briefly discuss 1 advantage and 1 disadvantage of this approach to budget
preparation using the context of the example given. (2 marks)
3. Discuss the following:
a. Are these budget standards challenging for the department that produces lip
gloss? (Use the numbers provided to support your argument) (2 marks)
b. Why do you suppose Chante picked these particular standards? (Critical
thinking) ( 2 marks)
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. (3 marks)
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