Comprehensive Profit Plan (Kaizen Budgeting) (Use information in Problem 10-50 for Spring Manufacturing Company.) Spring Manufacturing Company has had a continuous- improvement (kaizen) program for the last two years. According to the kaizen program, the firm is expected to 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 $30. Required 1. Prepare the following schedules or statements for 2019 assuming the firm can attain the expected operating level as prescribed by the kaizen program: ∙ Sales budget ∙ Production budget ∙ Direct materials purchases budget (in units and in dollars) ∙ Direct labor budget ∙ Factory overhead budget ∙ Cost of goods sold and ending inventory budgets ∙ Selling and administrative expense budget ∙ Income statement, the last line of which is labeled After-Tax Operating Income 2. What are the benefits of Spring Manufacturing Company adopting a continuous-improvement (kaizen) program? What are the primary limitations?
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