ABSTRACT
Value stream income statements are designed to meet the needs of different internal users. Value stream teams or managers can use them to better understand the direct impact of value stream performance on the sales and costs they control. Value stream income statements should be easy to read for non-financial users, using everyday language they understand, and also be based on a rational, simple chart of accounts. Value stream income statements should always report actual sales and actual costs incurred for the reporting period. The definition of fixed and variable costs is heavily influenced by financial reporting and analytical practices, which can make fixed costs, look like variable costs. In many companies, cost allocations are commonly used to assign costs to products, jobs, projects, customers and business units for analytical and reporting purposes. Value stream managers or teams have responsibility and accountability for value stream operating margin.
