OFC Company (Exercise 10-41) has decided to implement a kaizen (continuous-improvement) program to enhance operational efficiency. After a careful study, management and employees agree that the firm will be able to reduce cost rates for batch-level activities by 2% and unit-level activities (other than Storage) by 1% per month during the first year of the program starting February 2019. The firm has decided to delay the implementation of the program for customer-sustaining and facility-level activities until 2020. The firm expects the amount of cost-driver usage in each of the next two months to be the same as those in January. (Use 4 decimal points for all cost rates.)

Required

1. Identify unit-level and batch-level activities.

2. What are the total budgeted costs for each activity and for the division as a whole in February and March?

3. Identify three factors that are likely to be critical for a successful kaizen (i.e., continuous-improvement) program.

4. What are primary criticisms regarding kaizen (i.e., continuous-improvement) budgeting?