Marshall Company is a large manufacturer of office furniture. The company has recently adopted lean accounting and has identified two value streams—office chairs and office tables. Total sales in the most recent period for the two streams are $300 and $365 million, respectively. In the most recent accounting period, Marshall had the following operating costs, which were traced to the two value streams as follows (in thousands): Chairs Tables Operating costs: Materials $ 17,600 $ 15,600 Labor 134,000 102,000 Equipment-related costs 45,600 65,000 Occupancy costs 11,900 13,700 In addition to the traceable operating costs, the company had manufacturing costs of $171.750 million, and selling and administrative costs of $45 million that could not be traced to either value stream. Due to the implementation of lean methods, the firm has been able to reduce inventory in both value streams significantly. Marshall has calculated the fixed cost of prior period inventory that is included in the current income statement to be $6.5 million for the office chair stream and $25.0 million for the office table stream. Required: Prepare, in good form (i.e., using Exhibit 17.17 as a guide), the value-stream income statement for Marshall Company. (Enter your answers in thousands of dollars.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Marshall Company is a large manufacturer of office furniture. The company has recently adopted lean accounting and has identified two value streams—office chairs and office tables. Total sales in the most recent period for the two streams are $300 and $365 million, respectively.

In the most recent accounting period, Marshall had the following operating costs, which were traced to the two value streams as follows (in thousands):

	Chairs	Tables
Operating costs:
Materials	$	17,600	$	15,600
Labor		134,000		102,000
Equipment-related costs		45,600		65,000
Occupancy costs		11,900		13,700

In addition to the traceable operating costs, the company had manufacturing costs of $171.750 million, and selling and administrative costs of $45 million that could not be traced to either value stream. Due to the implementation of lean methods, the firm has been able to reduce inventory in both value streams significantly. Marshall has calculated the fixed cost of prior period inventory that is included in the current income statement to be $6.5 million for the office chair stream and $25.0 million for the office table stream.

Required:

Prepare, in good form (i.e., using Exhibit 17.17 as a guide), the value-stream income statement for Marshall Company. (Enter your answers in thousands of dollars.)

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