kaizen costing

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A technique for reducing and managing costs during the manufacturing process. Kaizen is the Japanese term for making continuous improvements to a process through small incremental changes. Managers will start with the previous year’s actual costs and set a target cost-reduction ratio for the current year. All employees are expected to contribute to improving processes and reducing costs. For kaizen costing to succeed, a degree of employee empowerment is therefore required.

Subjects: Accounting.

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