DeLuxe Limo Service has the following information for March.

Sales revenue $315,000

Variable costs of operations, excluding labor costs94,500

Employee wages and salaries106,500

Manager salaries 39,500

Fixed cost of automobiles 31,500

Building costs (rent, utilities, etc.) 19,000

^a2 percent of this cost was wasted due to poor directions given to limo drivers.

^b15 percent of this cost was for time spent by limo drivers because of poor directions.

^c15 percent of this cost was time taken to address customer complaints.

^dThe limos have 35 percent unused capacity.

^eThe building has 15 percent unused capacity.

Required:

a.Using the traditional income statement format, prepare a value income statement.(Loss amounts should be indicated with a minus sign.)

b.What value would there be to the managers at DeLuxe from preparing the same information in April?

• Preparing an April statement helps DeLuxe see whether he is improving in reducing nonvalue-added activities.
• Preparing an April statement helps DeLuxe see whether he is improving in reducing value-added activities.