Tom Magic Company manufactures various kinds of toys for different age groups. The company's flagship product is Rx. The company currently requires 8.50 labor hours to manufacture per unit of Rx. The company believes that because of numerous small improvements in the process, it will require 0.10 labor-hours less and hence will only 8.40 labor-hours in the next quarter. It will require 8.35 and 8.25 labor-hours in third and fourth quarter. The company has adopted ________.

Question

Quizplus · Accepted Answer

The company has adopted kaizen budgeting, which aims at making continuous improvements in the manufacturing process to reduce costs and increase efficiency. This is evident from the small improvements in labor-hours required to manufacture the product over the next three quarters. Activity-based budgeting focuses on identifying and allocating costs to specific activities, zero-based budgeting starts from scratch and requires justification for all expenses, and cost-based budgeting uses past costs as the basis for the budget. None of these approaches are explicitly mentioned in the scenario.

Tom Magic Company Manufactures Various Kinds of Toys for Different