Reference no: EM132527192

Quicken Loans has been displeased with the costs of servicing its consumer loans. Assume that it has decided to implement a Kaizen-based cost improvement program. For 2017, assume that Quicken Loans incurred the following costs ($ millions):

Loan processing                               $12,000

Customer relations                              2,000

Printing, mailing, and postage                    600

For the next two years, Quicken expects an increase in consumer loans of 5 percent annually with related increases in costs.

Question 1: If the company has a continuous improvement goal of 2 percent each year, the budgeted amount for Customer relations for 2018 will be:

Option 1: $2,058

Option 2: $1,480

Option 3: $2,100

Option 4: $1,960