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Kaizen approach to activity-based budgeting

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Kaizen approach to activity-based budgeting

Family Supermarkets (FS) has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2008. Each successive months, the budgeted cost-driver rate is 0.998 times January's budgeted cost-driver rate, and March's budgeted cost-driver rate is 0.998 times the budgeted February 2008 rate. FS assumes that the budgeted amount of cost-driver usage remains the same each month.

1. What is the total budgeted cost for each activity and the total budgeted indirect cost for March 2008?
2. What are the benefits of using a Kaizen approach to budgeting? What are the limitations of this approach, and how might FS management overcome them?

Other Info:

Activity Cost Driver 1/08 Budgeted 1/08 Budgeted
Cost Driver Rate Amt of Cost Driver Used
Drinks Produce Food
Ordering # of po's $90 14 24 14
Delivery # of deliveries $82 12 62 19
Shelf-stocking Hrs of stocking $21 16 172 94
Cmr support # of items sold $0.18 4,600 34,200 10,750

** please work in Excel

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Solution Summary

Response in excel...shows computations and gives you some ideas to start you thinking. Brief.