Value Stream Income Statements, Which Are Part of a Lean

question 76

Multiple Choice

Value stream income statements, which are part of a lean accounting system, have all the following characteristics except:

• A) They report segment profits in the form of value streams.
• B) They attempt to separate out the short-term effects of reductions in inventory.
• C) They separate traceable from non-traceable costs on the income statement.
• D) They calculate average costs for units in each value stream.
• E) They eliminate the need to deal with indirect costs.

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Definitions:

Fixed Factors

Inputs in the production process that remain constant and cannot be easily increased or decreased in the short term, such as machinery or land.

Economic Profits

Profits earned by a firm after accounting for both explicit and implicit costs, indicating the total returns exceeding the costs of all resources employed.

Economic Profit

The difference between a firm's total revenue and its total costs, including both the explicit and implicit costs, representing the financial gain exceeding the opportunity costs.

Total Revenue

The gross income of a company, which is the sum of money generated from its goods or services sold before deducting any costs.