Spring Manufacturing Company has had a continuous improvement (kaizen) program for the last two years. According to the kaizen program, the firm is expected in manufacture C12 and D57 with the following specifications: The company specifies that the variable factory overhead is to decrease by 10% while the fixed factory overhead is to decrease by 5%, except for depreciation expenses. The company does not expect the price of the raw materials to change. However, the hourly wage rate is likely to be exist30. Required 1. What is the budgeted after-tax operating income if the company can attain the expected operation level as prescribed by its kaizen program? 2. What are the benefits of Spring Manufacturing Company adopting a continuous-improvement program? What are the limitations? The firm expects the average wage rate to be exist25 per hour in 2016. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on the budgeted output for the year. The firm maintains negligible work-in-process inventory and expects the cost per unit for both beginning and ending finished products inventories to be identical. The effective income tax rate for the company is 40% Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2016 follow