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DeLuxe Limo Service has the following information for March: Sales revenue Variable costs of operations, excluding labor costsa Employee wages and salaries Manager salaries Fixed
DeLuxe Limo Service has the following information for March: Sales revenue Variable costs of operations, excluding labor costsa Employee wages and salaries Manager salaries Fixed cost of automobilesd Building costs (rent, utilities, etc.) $ 250,000 75,000 100,000 20,000 25,000 12,500 a 5 percent of this cost was wasted due to poor directions given to limo drivers. b5 percent of this cost was for time spent by limo drivers because of poor directions C10 percent of this cost was time taken to address customer complaints. d The limos have 40 percent unused capacity. The building has 10 percent unused capacity, Required: a. Using the traditional income statement format, prepare a value income statement. (Loss amo sign.) e Total 250,000 DELUXE LIMO SERVICE Value Income Statement For the Month Ending March 31 Nonvalue- Value- added added Activities Activities Sales revenue $ 250,000 $ Cost of services sold: Variable costs of operations, excluding labor costs $ 3,750 71,250 Employee wages and salaries 5,000 95,000 Fixed cost of automobiles 10,000 15,000 Gross margin (loss) $ 0 x $ OS Administrative expenses: Manager salarios 0 % 0 % Building costs 1,250 11,250 Operating income (loss) 0 0 $ 75,000 100,000 25,000 0 % 20,000 12,500 0 b. What value would there be to the managers at Deluxe from preparing the same information in April? Preparing a April statement helps Deluxe see whether he is improving in reducing nonvalue-added activities. Preparing a April statement helps Deluxe see whether he is improving in reducing value-added activities
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