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DeLuxe Limo Service has the following information for March. Sales revenue $315,000 Variable costs...

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Accounting

DeLuxe Limo Service has the following information for March.

Sales revenue $315,000

Variable costs of operations, excluding labor costs94,500

Employee wages and salaries106,500

Manager salaries 39,500

Fixed cost of automobiles 31,500

Building costs (rent, utilities, etc.) 19,000

a2 percent of this cost was wasted due to poor directions given to limo drivers.

b15 percent of this cost was for time spent by limo drivers because of poor directions.

c15 percent of this cost was time taken to address customer complaints.

dThe limos have 35 percent unused capacity.

eThe building has 15 percent unused capacity.

Required:

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

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

  • Preparing an April statement helps DeLuxe see whether he is improving in reducing nonvalue-added activities.
  • Preparing an April statement helps DeLuxe see whether he is improving in reducing value-added activities.

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