Marshall Company is a large manufacturer of office furniture. The company has recently adopted lean accounting and
Question:
Marshall Company is a large manufacturer of office furniture. The company has recently adopted lean accounting and has identified two value streams-office chairs and office tables. Total sales in the most recent period for the two streams are $245 and $310 million, respectively.
In the most recent accounting period, Marshall had the following operating costs, which were traced to the two value streams as follows (in thousands).
______________________________Chairs.....................Tables
Operating costs:
Materials.................................$16,500...................$14,500
Labor......................................123,000.....................96,500
Equipment-related costs...................44,500......................62,800
Occupancy costs.........................11,350......................12,600
In addition to the traceable operating costs, the company had manufacturing costs of $116,750,000 and selling and administrative costs of $25 million that could not be traced to either value stream.
Due to the implementation of lean methods, the firm has been able to reduce inventory in both value streams significantly. Marshall has calculated the fixed cost of prior period inventory that is included in the current income statement to be $5.5 million for the office chair stream and $22.5 million for the office table stream.
Required
Prepare the value-stream income statement for Marshall Company.
Step by Step Answer:
Cost Management A Strategic Emphasis
ISBN: 978-0077733773
7th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins