Wabash Manufacturing Implemented Lean Manufacturing in Its Mississauga Plant as a Pilot

question 57

Essay

Wabash Manufacturing implemented lean manufacturing in its Mississauga plant as a pilot program.During the most recent three weeks,the following data pertaining to a specific product line value stream was collected:
$\begin{array}{ll}\text { Week 1: } & \text { Sales }=500 \text { units } @ \$ 50 \text { per unit selling price } \\& \text { Beginning inventory }=80 \text { units } @ 15 \text { ( } \$ 5 \text { materials, } \$ 10 \text { conversion) } \\& \text { Production }=500 \text { units } @ \$ 15(\$ 5 \text { materials, } \$ 10 \text { conversion) } \\\text { Week 2: } & \text { Sales }=675 \text { units at } \$ 50 \text { per unit selling price } \\& \text { Beginning inventory }=80 \text { units at } \$ 15(\$ 5 \text { materials, } \$ 10 \text { conversion }) \\& \text { Production }=595 \text { units at } \$ 15(\$ 5 \text { materials, } \$ 10 \text { conversion }) \\\text { Week 3: } & \text { Sales }=650 \text { units at } \$ 50 \text { per unit selling price } \\& \text { Beginning Inventory }=0 \\& \text { Production }=700 \text { units at } \$ 15(\$ 5 \text { materials, } \$ 10 \text { conversion })\end{array}$
a.Prepare a traditional income statement for each week.
b.Calculate the average value stream product cost for each week.What does this cost signal,if anything?
c.Prepare a value stream income statement for each week.Assume that any increase in inventory is valued at average cost.Comment on the financial performance of the value stream and its relationship to traditional income measurement.

---

Definitions:

Market Price

The real-time price for buying or selling an asset or service.

Face Value

The nominal or dollar value printed on a security or currency, indicating its legal worth.

Coupon Rate

The annual interest rate paid by a bond's issuer to its holders, usually expressed as a percentage of the bond's face value.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage.