Value-Stream Reporting with Inventory Decrease

Rivera 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	= 90 units @ $40
Beginning inventory	= 10 units @ $20 ($5 materials and $15 conversion)
Production	= 90 units using $450 of materials and $1,350 of conversion cost

Week 2:

Demand	= 100 units @ $40
Beginning inventory	= 10 units @ $20 ($5 materials and $15 conversion)
Production	= 90 units using $450 of materials and $1,350 of conversion cost

Week 3:

Demand	= 90 units @ $40
Beginning inventory	= 0
Production	= 100 units using $500 of materials and $1,500 of conversion cost

Required:

Question Content Area

1. Prepare a traditional income statement for each week.

Rivera Manufacturing, Inc. Traditional Income Statement

	Week 1	Week 2	Week 3
Conversion costCost of goods soldChange in inventoryMaterialsSalesSales	$Sales	$Sales	$Sales
Conversion costCost of goods soldChange in inventoryMaterialsSalesCost of goods sold	Cost of goods sold	Cost of goods sold	Cost of goods sold
Gross profit	$fill in the blank c8cd4803cf83064_9	$fill in the blank c8cd4803cf83064_10	$fill in the blank c8cd4803cf83064_11

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Feedback

Gross profit is calculated by considering revenue and expense-related accounts.

Question Content Area

2. Calculate the average value-stream product cost for each week. If required, round your answers to the nearest cent.

Week 1	$fill in the blank a0868dfebffe01f_1 per unit
Week 2	$fill in the blank a0868dfebffe01f_2 per unit
Week 3	$fill in the blank a0868dfebffe01f_3 per unit

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3. Prepare a value-stream income statement for each week. Assume that any increase in inventory is valued at average cost. If an amount is zero, enter "0".

Rivera Manufacturing, Inc. Value-Stream Income Statement

	Week 1	Week 2	Week 3
Change in inventoryConversion costMaterialsSalesValue-stream profitSales	$Sales	$Sales	$Sales
Cost of goods soldChange in inventoryMaterialsSalesValue-stream profitMaterials	Materials	Materials	Materials
Change in inventoryConversion costCost of goods soldSalesValue-stream profitConversion cost	Conversion cost	Conversion cost	Conversion cost
Value-stream profit	$fill in the blank 69028dfa300b035_13	$fill in the blank 69028dfa300b035_14	$fill in the blank 69028dfa300b035_15
Change in inventoryConversion costMaterialsSalesValue-stream profitChange in inventory	Change in inventory	Change in inventory	Change in inventory
Gross profit	$fill in the blank 69028dfa300b035_20	$fill in the blank 69028dfa300b035_21	$fill in the blank 69028dfa300b035_22