Activity-Based Budgeting (ABB) with Continuous Improvement OFC Company (Exercise10-41) 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 ableto reduce cost rates for batch-level activities by 2% and unit-level activities (other than Storage) by1% per month during the first year of the program starting February 2019. The firm has decided todelay the implementation of the program for customer-sustaining and facility-level activities until2020. The firm expects the amount of cost-driver usage in each of the next two months to be thesame as those in January. (Use 4 decimal points for all cost rates.)Required2. What are the total budgeted costs for each activity and for the division as a whole in February andMarch?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Activity-Based Budgeting (ABB) with Continuous Improvement 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
2. What are the total budgeted costs for each activity and for the division as a whole in February and
March?
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