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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

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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 financial 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: Cell Phone Group TV Group Units Beginning inventory Price Sold Budgeted and actual production 3,500 $ 165 16,500 17,000 8,500 $ 215 17,100 16,500 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: 5 Cell Phone Group TV Group Total Unit variable costs Manufacturing $ 95 $ 130 Selling and administrative 5 Traceable fixed costs Manufacturing 272,000 333,300 $ 605,300 Selling and administrative 130,000 130,000 260,000 Nontraceable fixed costs Manufacturing 88,000 Selling and administrative 80,800 Required: Consider Levine's two value streams as profit centers, and use the contribution income statement as a guide to develop a value- stream 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 Exhibit 18.9) with value-stream profit. Be sure to include the inventory effect on profit as a separate line item in your value-stream income statement. 2. What is the value stream profit of TVs? The value stream profit of TVs

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