New South Wales Television Corporation manufactures TV sets in Australia, largely for the domestic market. Management has recently implemented a kaizen costing program, with the goal of reducing the manufacturing cost per television set by 10 percent during 20x5, the first year of the kaizen effort. The cost per TV set at the end of 20x4 was \($500\) . The following table shows the average cost per television set during each month of 20x5. (The day this problem was written, the Australian dollar was valued at \($.53\) in U.S. dollars.)

Required: 

Prepare a kaizen costing chart for 20x5 to show the results of the company's first year of kaizen costing. In developing the chart, use the following steps.
1. Draw and label the axes of the kaizen costing chart.
2. Indicate the current year cost base and the kaizen goal (cost reduction rate) on the chart.
3. Label the horizontal axis with the months of 20x5. Label the vertical axis with dollar amounts in the appropriate range.
4. Plot the 12 monthly average cost amounts per TV set. Then draw a line connecting the cost points that were plotted.
5. Complete the chart with any further labeling necessary.
6. Briefly explain the purpose of kaizen costing. How could a continuous quality-improvement program, coupled with the kaizen costing effort implemented by New South Wales Television Corporation, help the firm begin competing in the worldwide market?

Transcribed Image Text:

Month Cost per Set Month Cost per Set January February. $500 July $485 500 August 470 March 495 September 460 April. 492 October. 460 May 490 November 450 June 485 December 440