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HRS is a food producer that makes low cost processed food that it sells to supermarkets. HRS produces only one type of processed food product and production techniques have remained largely unchanged for a number of years. Over recent months, sales have been falling steadily. Consumer tastes are changing to favour natural ingredients and supermarkets have reflected this in the products that they offer for sale. HRS is keen to address the decline in sales and recently held a meeting to discuss the performance of the organisation. The Management Accountant suggested to the Managing Director that the performance of HRS could be improved by implementing Total Quality Management (TQM) principles and adopting Kaizen costing concepts. Currently the control systems of HRS focus on material price and usage. The Managing Director is sceptical of the Management Accountant's suggestions and is unclear as to whether they are suitable for the company.
Required: (a) Explain TWO concepts of Kaizen costing.
(b) Explain THREE conditions that must exist for TQM to be successfully implemented at HRS.
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