Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 23

Activity-Based Budgeting (ABB) with Continuous Improvements OFC Company (Exercise 10-40) has decided to implement a continuous-improvements program to enhance operational efficiency. After a careful study, management and employees agree that the firm will be able to reduce cost rates for batch-level activities by 2% and unit-level activities by 1% per month during the first year of the program starting February 2013. The firm has decided to delay the implementation of the program for customer-sustaining and facility-level activities until 2014. The firm expects the amount of cost-driver usage in each of the next two months to be the same as those in January. (Use 4 decimal points for all cost rates.)
Required
1. Identify unit-level and batch-level activities.
2. What are the total budgeted costs for each activity and for the division as a whole in February and March
3. Identify three factors that are likely to be critical for a successful kaizen program.
4. What are primary criticisms regarding kaizen budgeting
Reference: