Japanese term for CONTINUOUS IMPROVEMENT. Kaizen budgeting incorporates expectations for continuous improvement into budgetary estimates. Kaizen costing determines target cost reductions for a period, such as a month. Thus, variances are the differences between actual and targeted cost reduction. The objective is to reduce actual costs below standard costs. The cost-reduction activities associated with the Kaizen approach minimize costs throughout the entire product life cycle. Therefore, it has the advantage of being closely related to the entity's profit-planning procedures.