Information:
An automotive parts division has a grinding activity for the subassemblies that it produces. Activity output is measured using grinding hours, The value-added standard (SO) for this activity is grinding hours. On January at the beginning of the fiscal year, eight grinding hours were allowed per batch (which almost always corresponded to the actual grinding hours used). The standard wage rate is S18 per grinding new procedure for production of the subassemblies was developed with the expectation that the demand for grinding would be reduced by 25 percent. The new procedure was implemented in February and expectations concerning the effect on the grinding activity met.
Required:
1. What are the maintenance standard for grinding hours and the associated expected cost at the beginning of February? The kaizen standard and expected associated cost?
2. What are the maintenance standard for grinding hours and the associated cost at the end of February? Explain. What is the next step in the kaizen cost reduction
3. What if the new procedure implemented in February produced a 20 percent reduction instead of a 25 percent reduction? What would the new maintenance standard and cost be?