Levine Company is a manufacturer of very Inexpensive cell phones and television sets. The company uses recycled parts and a highly structured manufacturing process to keep costs low so that it can sell at very low prices. The company uses lean accounting procedures to help keep costs low and to examine financlal performance. Levine uses value streams to study the profitability of its two main product groups, cell phones and TVs. Information about finished goods Inventory, sales, production, and average sales price follows: Levine's costs for the current quarter are as follows. Note that some of the company's manufacturing and selling costs are traceable directly to the two value streams, while other costs are not traceable. Levine considers all traceable fixed costs to be controllable by the manager of each group. Also, Levine's value stream shows operating Income determined by the full costing method; the difference from the traditional full costing income statement is that the effect on Income from a change in inventory Is shown as a separate item on the value-stream Income statement: Required: Consider Levine's two value streams as profit centers, and use the contribution income statement as a gulde to develop a valuestream Income statement for the company. (See Exhibit 18.9 for an example of a contribution income statement) In your solution, replace the term controllable margin (In Exhiblt 18.9 ) with value-stream profit Be sure to Include the Irventory effect on profit as a separate line item in your value-stream Income statement. 1. What is the effect of the Inventory change (and in what direction) on the value stream profit of cell phones? 2. What is the value stream profit of TVs? Levine Company is a manufacturer of very Inexpensive cell phones and television sets. The company uses recycled parts and a highly structured manufacturing process to keep costs low so that it can sell at very low prices. The company uses lean accounting procedures to help keep costs low and to examine financlal performance. Levine uses value streams to study the profitability of its two main product groups, cell phones and TVs. Information about finished goods Inventory, sales, production, and average sales price follows: Levine's costs for the current quarter are as follows. Note that some of the company's manufacturing and selling costs are traceable directly to the two value streams, while other costs are not traceable. Levine considers all traceable fixed costs to be controllable by the manager of each group. Also, Levine's value stream shows operating Income determined by the full costing method; the difference from the traditional full costing income statement is that the effect on Income from a change in inventory Is shown as a separate item on the value-stream Income statement: Required: Consider Levine's two value streams as profit centers, and use the contribution income statement as a gulde to develop a valuestream Income statement for the company. (See Exhibit 18.9 for an example of a contribution income statement) In your solution, replace the term controllable margin (In Exhiblt 18.9 ) with value-stream profit Be sure to Include the Irventory effect on profit as a separate line item in your value-stream Income statement. 1. What is the effect of the Inventory change (and in what direction) on the value stream profit of cell phones? 2. What is the value stream profit of TVs
