A firm uses value stream income statements. These statements include one value streams and two non-value...

A firm uses value stream income statements. These statements include one value streams and two non-value streams. The value stream income statement shows the following cost numbers for the firm's value stream $100,000 materials cost, $150,000 labor cost, and $75,000 overhead cost. (The firm has no fixed overhead.)

Which of the following is TRUE about these cost numbers?

	a.	The firm most likely scrutinizes these costs closely because they are likely to be waste.
	b.	The firm most likely considers these direct labor and overhead costs to be waste.
	c.	The firm most likely considers the overhead cost to be waste.
	d.	The firm most likely control these costs through a process of continuous improvement.

Expert Solution

Answer is option D

The firm most likely control these costs through a process of continuous improvement.

Value stream costs are considered to be non-waste costs. This type of income statement is widely used by the lean firms as their main objective is to control waste.

ekkarill92 answered 3 years ago

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