Custom Furniture, manufacturer of handmade furniture, uses standard cost accounting for the company. Standards are developed annually based on input from production workers and supervisors.

The supervisor of the table department has approached several employees that work for him and suggested that the employees overestimate the amount of materials (by 20%) and labor (by 30%) involved in producing certain new tables. He states that it is better to overestimate than underestimate costs as the product has never been manufactured in quantity before and it is uncertain what the actual materials and labor will be. In addition, he states that this would result in any variances being favorable to the department.

The employees are not sure what estimates they should discuss with the accounting department.
The accounting department wants accurate input that it will adjust for uncertainty.

Required 

How would you advise the employees? What ethical issues are involved?