Kaizen Costing

Kaizen costing is concerned with reducing costs by making small continuous improvements to existing products and processes. In operational terms, this translates into reducing non$-$value$-$added costs. Controlling this cost reduction process is accomplished by repetitive use of two major subcycles: $(1)$ the kaizen or continuous improvement subcycle, and $(2)$ the maintenance subcycle. The kaizen subcycle is defined by a Plan$-$Do$-$Check$-$Act sequence. If a company is emphasizing the reduction of non$-$value$-$added costs, the amount of improvement planned for the coming period $($month$,$ quarter, etc.$)$ is set $($the Plan step$).$ A kaizen standard reflects the planned improvement for the upcoming period. The planned improvement is assumed to be attainable, and kaizen standards are a type of currently attainable standard. Actions are taken to implement the planned improvements $($the Do step$).$ Next, actual results $($e$.$g$.,$ costs$)$ are compared with the kaizen standard to provide a measure of the level of improvement attained $($the Check step$).$ Setting this new level as a minimum standard for future performance locks in the realized improvements and simultaneously initiates the maintenance cycle and a search for additional improvement opportunities $($the Act step$).$ The maintenance cycle follows a traditional Establish$-$Do$-$Check$-$Act sequence. A standard is set based on prior improvements $($locking in these improvements$).$ Next, actions are taken $($the Do step$)$ and the results checked to ensure that performance conforms to this new level $($the Check step$).$ If not, then corrective actions are taken to restore performance $($the Act step$).$

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Apply the Concepts

An automotive parts division has a grinding activity for the subassemblies that it produces. Activity output is measured using grinding hours. The value$-$added standard $($SQ$)$ for this activity is zero grinding hours. On July $1,$ at the beginning of the fiscal year, sixteen grinding hours were allowed per batch $($which almost always corresponded to the actual grinding hours used$).$ The standard wage rate is $$20$ per grinding hour. During July, a new procedure for production of the subassemblies was developed with the expectation that the demand for grinding would be reduced by $25$ percent. The new procedure was implemented in August and expectations concerning the effect on the grinding activity were met.

Required:

$1$a$.$ The maintenance standard per batch at the beginning of August $($for grinding$)$:fill in the blank c$74$dfffe$9069060\_1$ hours

$1$b$.$ Expected grinding cost $($per batch$)$ on August $1$: $fill in the blank c$74$dfffe$9069060\_2$

$1$c$.$ Kaizen standard, August $1$: fill in the blank c$74$dfffe$9069060\_3$ hours per batch

$1$d$.$ Expected cost $($Kaizen$),$ August $1$: $fill in the blank c$74$dfffe$9069060\_4$

$2.$ Assume that a $20$ percent reduction in time for grinding was achieved in August. After determining that this reduction is sustainable, the maintenance subcycle would be revised as follows:

$2$a$.$ New maintenance standard per batch, end of August $($for grinding$)$: fill in the blank c$74$dfffe$9069060\_5$ hours

$2$b$.$ Expected grinding cost: $($Round your answer to one decimal place.$)$ $fill in the blank c$74$dfffe$9069060\_6$

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