# solution

Rivera 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 1: Demand= 110 units @ \$40 Beginning inventory= 5 units @ \$20 (\$5 materials and \$15 conversion) Production= 110 units using \$400 of materials and \$1,250 of conversion cost Week 2: Demand= 120 units @ \$40 Beginning inventory= 5 units @ \$20 (\$5 materials and \$15 conversion) Production= 110 units using \$400 of materials and \$1,250 of conversion cost Week 3: Demand= 110 units @ \$40 Beginning inventory= 0 Production= 120 units using \$550 of materials and \$1,550 of conversion cost 1. Prepare a traditional income statement for each week. Rivera Manufacturing, Inc. Traditional Income Statement Week 1 Week 2 Week 3 \$ \$ 10 Gross profit Change in inventory Conversion cost Cost of goods sold Materials Sales 2. Calculate the average value-stream product cost for each week. If required, round your answers to the nearest cent. Week 1 per unit Week 2 \$ per unit Week 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”. Rivera Manufacturing, Inc. Value-Stream Income Statement Week 1 Week 2 Week 3 Value-stream profit Gross profit \$ Change in inventory Conversion cost Materials Sales Value-stream profit Change in inventory Cost of goods sold Materials Sales Value-stream profit Conversion cost Cost of goods sold Change in inventory Sales Value-stream profit Change in inventory Conversion cost Materials Sales Value-stream profit

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