Preeti Telang, the partner in charge of a small accounting firm, has launched a kaizen costing program to reduce office support costs. She expects the program to reduce costs by at least 10%. Information for the first six months of the program and estimated cost savings for the next six months follows.

REQUIRED
A. Calculate the percent change in costs and determine whether the kaizen cost goal is likely to be met.
B. Identify two possible quality problems that could arise from the planned changes tooperations.

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Actual Cost Last 6 Months Estimated Cost Next 6 Months Postage fees (deliver more reports and tax returns using fax; the company can make unlimited calls for a flat fee per month) Photocopy costs (outsource copy function to save labor cost) Labor costs (more efficient scheduling of support staff) $6,000 $2,500 $15,000 $5,500 $2,000 $14,500