DeLuxe Limo Service has the following information for March.
|Variable costs of operations, excluding labor costsa
|Employee wages and salariesb
|Fixed cost of automobilesd
|Building costs (rent, utilities, etc.)e
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.)
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.
Below is the value income statement for Deluxe LIMO services for the month ending March 31:
Correct answer is "A. Preparing a April statement helps DeLuxe see whether he is improving in reducing nonvalue-added activities."