Refer to text Exhibit 10.19 (the ABB for Kerry Window Systems, Inc.). As the management accountant for Kerry you have been asked to evaluate the possibility of implementing a continuous-improvement (i.e., kaizen) budgeting system. Assume that budgeted cost-driver usage data in Part A of Exhibit 10.19 will continue over the foreseeable future.

Required

1. Recalculate the budgeted factory overhead costs for June under the assumption that, starting in May, each budgeted activity cost rate decreases by 0.5% relative to the preceding month.

2. In general, what are the anticipated benefits of using a kaizen approach to budgeting?

3. What do you envision as the principal concerns or limitations regarding the use of kaizen budgeting?

4. Provide some examples of how, in the Kerry example, the company would be able to realize the budgeted cost savings referenced above in requirement 1.