Continuous Improvement (Kaizen) Costing (LO4) Assume that GE Capital, a division of General Electric, has been displeased
Question:
Continuous Improvement (Kaizen) Costing (LO4)
Assume that GE Capital, a division of General Electric, has been displeased with the costs of servicing its consumer loans. Assume that it has decided to implement a Kaizen-based cost improvement program.
For 2012, GE Capital incurred the following costs:
OAIMMOKOCESSINGR asec e's fave neu ele $14,500,000 Customerrelations. -......0.5.-5 3,500,000 Printing, mailing, and postage..... 800,000 For the next two years, GE Capital expects an increase in consumer loans of 4 percent annually with related increases in costs.
Required
a. If the company has a continuous improvement goal of 2 percent each year, develop a budget for the next two years for the consumer loan department.
b. Identify some possible ways that GE Capital can achieve the Kaizen costing goal.
c. Discuss the potential benefits and limitations of GE’s Kaizen costing model.
LO.1
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