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Cost Accounting and Management Decisions
Finance & Accounting
Pages 5 (1255 words)
Cost Accounting and Management Decisions Name: Institution: Ford Motor Company Description Henry Ford founded Ford Motor Company in 1903. Headquartered in Dearborn, Michigan, the company mainly produces three products automobiles, commercial vehicles and automobile parts. Ford is currently the second largest U.S based automaker but the fifth in the world.
1). Management of this company believes in ranking the automobiles by the quantity of contribution margin earned for internal decision-making purposes. They view direct labor, direct material, and the variable manufacturing overhead as product costs while fixed manufacturing overhead as period costs (Hicks, 2002, p. 36). A major change in the company’s manufacturing has been conversion of most of the plants to produce smaller cars instead of the bigger cars that are seen as fuel inefficient. In the recent past, Ford Motor Company has concentrated of production and sell of small cars that achieve higher mileage on less fuel. This strategy has been influenced by the desire to cut on the global air pollution, something responsible for the global warming. The current global challenges have made the company embark on manufacturing varieties of the automobiles to ensure that the costs are balanced. For this reason, management has lately discouraged any production of goods that do not produce adequate sales to cover up its variable manufacturing costs (Weygandt, Kimmel and Kieso, 2011, p. 23). The company has maintained the main manufacturing lines of cars, trucks, buses, tractors, and their spare parts. ...
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