Shorts 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: 1. Prepare a traditional income statement for each week. Shorts Manufacturing, Inc. Traditional Income Statement Week 1 Week 2 Week 3 $fill in the blank c2994601b071ff5_2 $fill in the blank c2994601b071ff5_3 $fill in the blank c2994601b071ff5_4 fill in the blank c2994601b071ff5_6 fill in the blank c2994601b071ff5_7 fill in the blank c2994601b071ff5_8 Gross profit $fill in the blank c2994601b071ff5_9 $fill in the blank c2994601b071ff5_10 $fill in the blank c2994601b071ff5_11 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 dc598c0a6056013_1 per unit Week 2 $fill in the blank dc598c0a6056013_2 per unit Week 3 $fill in the blank dc598c0a6056013_3 per unit 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". Shorts Manufacturing, Inc. Value-Stream Income Statement Week 1 Week 2 Week 3 $fill in the blank 30c5b5ff3038f87_2 $fill in the blank 30c5b5ff3038f87_3 $fill in the blank 30c5b5ff3038f87_4 fill in the blank 30c5b5ff3038f87_6 fill in the blank 30c5b5ff3038f87_7 fill in the blank 30c5b5ff3038f87_8 fill in the blank 30c5b5ff3038f87_10 fill in the blank 30c5b5ff3038f87_11 fill in the blank 30c5b5ff3038f87_12 Value-stream profit $fill in the blank 30c5b5ff3038f87_13 $fill in the blank 30c5b5ff3038f87_14 $fill in the blank 30c5b5ff3038f87_15 fill in the blank 30c5b5ff3038f87_17 fill in the blank 30c5b5ff3038f87_18 fill in the blank 30c5b5ff3038f87_19 Gross profit $fill in the blank 30c5b5ff3038f87_20 $fill in the blank 30c5b5ff3038f87_21 $fill in the blank 30c5b5ff3038f87_22
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Shorts 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:
1. Prepare a traditional income statement for each week.
| Shorts Manufacturing, Inc. | |||
| Traditional Income Statement | |||
| Week 1 | Week 2 | Week 3 | |
| $fill in the blank c2994601b071ff5_2 | $fill in the blank c2994601b071ff5_3 | $fill in the blank c2994601b071ff5_4 | |
| fill in the blank c2994601b071ff5_6 | fill in the blank c2994601b071ff5_7 | fill in the blank c2994601b071ff5_8 | |
| Gross profit | $fill in the blank c2994601b071ff5_9 | $fill in the blank c2994601b071ff5_10 | $fill in the blank c2994601b071ff5_11 |
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 dc598c0a6056013_1 per unit |
| Week 2 | $fill in the blank dc598c0a6056013_2 per unit |
| Week 3 | $fill in the blank dc598c0a6056013_3 per unit |
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".
| Shorts Manufacturing, Inc. | |||
| Value-Stream Income Statement | |||
| Week 1 | Week 2 | Week 3 | |
| $fill in the blank 30c5b5ff3038f87_2 | $fill in the blank 30c5b5ff3038f87_3 | $fill in the blank 30c5b5ff3038f87_4 | |
| fill in the blank 30c5b5ff3038f87_6 | fill in the blank 30c5b5ff3038f87_7 | fill in the blank 30c5b5ff3038f87_8 | |
| fill in the blank 30c5b5ff3038f87_10 | fill in the blank 30c5b5ff3038f87_11 | fill in the blank 30c5b5ff3038f87_12 | |
| Value-stream profit | $fill in the blank 30c5b5ff3038f87_13 | $fill in the blank 30c5b5ff3038f87_14 | $fill in the blank 30c5b5ff3038f87_15 |
| fill in the blank 30c5b5ff3038f87_17 | fill in the blank 30c5b5ff3038f87_18 | fill in the blank 30c5b5ff3038f87_19 | |
| Gross profit | $fill in the blank 30c5b5ff3038f87_20 | $fill in the blank 30c5b5ff3038f87_21 | $fill in the blank 30c5b5ff3038f87_22 |
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