In: Accounting

# DeLuxe Limo Service has the following information for March. Sales revenue $310,000 Variable costs of... DeLuxe Limo Service has the following information for March.  Sales revenue$ 310,000 Variable costs of operations, excluding labor costsa 93,000 Employee wages and salariesb 106,000 Manager salariesc 38,000 Fixed cost of automobilesd 31,000 Building costs (rent, utilities, etc.)e 18,500

a 5 percent of this cost was wasted due to poor directions given to limo drivers.

b 5 percent of this cost was for time spent by limo drivers because of poor directions.

c 10 percent of this cost was time taken to address customer complaints.

d The limos have 40 percent unused capacity.

e The building has 10 percent unused capacity

a. Using the traditional income statement format, prepare a value income statement. (Loss amounts should be indicated with a minus sign.)

 DELUXE LIMO SERVICE Value Income Statement For the Month Ending March 31 Nonvalue-added Activities Value-added Activities Total Sales revenue Cost of services sold: Variable costs of operations, excluding labor costs Employee wages and salaries Fixed cost of automobiles Gross margin (loss) Administrative expenses: Manager salaries Building costs Operating income (loss)

What value would there be to the managers at DeLuxe from preparing the same information in April?

A. Preparing a April statement helps DeLuxe see whether he is improving in reducing nonvalue-added activities.

B. Preparing a April statement helps DeLuxe see whether he is improving in reducing value-added activities.

## Solutions

##### Expert Solution

Solution:

Below is the value income statement for Deluxe LIMO services for the month ending March 31:

Working

Solution:

Correct answer is "A. Preparing a April statement helps DeLuxe see whether he is improving in reducing nonvalue-added activities."

## Related Solutions

##### Total sales revenue is $1000, total variable costs are$600 and total fixed costs are $1000.... Total sales revenue is$1000, total variable costs are $600 and total fixed costs are$1000. The price is $10 per unit. Compute the break-even volume in units (assume that the break-even point is in the relevant range). A) 166.7 units B) 250 units C) 280 units D) 2500 units Beta company allocates fixed overhead costs based on direct labor dollars, with an allocation rate of$5 per DL$. Beta sells 1000 units of product X per month at a... ##### The following information relates to Myer, Inc.: Advertising Costs$10,600 Sales Salary 10,000 Sales Revenue 500,000...
The following information relates to Myer, Inc.: Advertising Costs $10,600 Sales Salary 10,000 Sales Revenue 500,000 President's Salary 230,000 Office Rent 60,500 Manufacturing Equipment Depreciation 1200 Indirect Materials Used 8000 Indirect Labor 13,000 Factory Repair and Maintenance 920 Direct Materials Used 27,500 Direct Labor 36,000 Delivery Vehicle Depreciation 1550 Administrative Salaries 22,000 Match cost with amount. Column A a.$413,380 b.$334650 c.$78,730 d.$63,500 e.$23,120 f.$86,620 g.$59,120 Column B 1. Period costs: 2. Prime costs: 3. Product costs: 4. Manufacturing Overhead:...