Value-Stream Reporting with Inventory Decrease

Shorts Manufacturing, Inc., has implemented lean manufacturing in its Kansas City plant as a pilot program. One of its value streams produces a family of small electric tools. The value-stream team managers were quite excited about the results, as some of their efforts to eliminate waste were proving to be effective. During the most recent three weeks, the following data pertaining to the electric tool value stream were collected:

Week l:

Demand	= 110 units @ $55
Beginning inventory	= 5 units @ $20 ($5 materials and $15 conversion)
Production	= 110 units using $400 of materials and $1,350 of conversion cost

Week 2:

Demand	= 120 units @ $55
Beginning inventory	= 5 units @ $20 ($5 materials and $15 conversion)
Production	= 110 units using $400 of materials and $1,350 of conversion cost

Week 3:

Demand	= 110 units @ $55
Beginning inventory	= 0
Production	= 120 units using $500 of materials and $1,600 of conversion cost

Required:

1. Prepare a traditional income statement for each week.

Shorts Manufacturing, Inc.
Traditional Income Statement
		Week 1		Week 2		Week 3
Sales		$		$		$
Cost of Goods Sold
Gross profit		$				$