StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Cost Accounting and Management Decisions - Assignment Example

Cite this document
Summary
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…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.3% of users find it useful
Cost Accounting and Management Decisions
Read Text Preview

Extract of sample "Cost Accounting and Management Decisions"

Download file to see previous pages

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.

Ford’s success motorsport has been evident in their ability to manufacture rally cars, stock cars, formula one, sports cars, as well as touring cars. It is also important to note that the company has maintained its presence in all parts of the world, having assembly lines in many countries in order to serve many regions. Changes in the Variable/Fixed Cost Structure of the Company on Cost-Volume Analysis Decision by Managers First, it is important to note that fixed costs do not change as a whole but register changes per unit when production volume changes, and on the other hand, variable cost indicates constant unit cost but changes in total when a decrease or an increase in production is registered.

Ford’s fixed costs may include rents for the plants and machinery while variable costs may include direct labor. This means that fixed cost is as important as variable cost and monitoring the changing trends stands to help managers make informed decisions. World over, absorption costing is commonly used for both internal and external information in an organization. Most companies use absorption approach entirely because of its attention on full costing of units of a particular product. In order to make informed choices, most managers assume that fixed manufacturing overheads directly vary in relation to the automobile units sold, something that never works (Weygandt, Kimmel and Kieso, 2011, p. 103). Managers who make this mistake may assume that since costing is done per unit base, an additional manufactured should cost the same, while reality shows an additional expense.

Ford Motor Company is a multinational manufacturer, employing very many employees in all the plants across the globe. Labor has been an important factor in ensuring that production consistency is achieved in this company. In the current economic uncertainties, managers in this company are sometimes faced with the dilemma of laying of workforce in an attempt to maintain profitability. Such a decision is informed by the notion that direct labor is variable cost, something that is disputable because most of its workers are highly skilled and are under employment contracts.

For this reason, any decision made by the

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Cost Accounting and Management Decisions Assignment”, n.d.)
Cost Accounting and Management Decisions Assignment. Retrieved from https://studentshare.org/finance-accounting/1492598-cost-accounting-and-management-decisions
(Cost Accounting and Management Decisions Assignment)
Cost Accounting and Management Decisions Assignment. https://studentshare.org/finance-accounting/1492598-cost-accounting-and-management-decisions.
“Cost Accounting and Management Decisions Assignment”, n.d. https://studentshare.org/finance-accounting/1492598-cost-accounting-and-management-decisions.
  • Cited: 1 times

CHECK THESE SAMPLES OF Cost Accounting and Management Decisions

Cost Accounting

265) pointed that fixed manufacturing costs are never considered to be production costs and these are not considered in the inventory valuation as well as in management's decision making process.... 441), found that the very basic advantage of using marginal costing is that it is an easy success-pathway for the management to make proper decision and achieve business success accordingly.... 296) defined, marginal costing is an accounting system in which variable costs are charged to some specific cost units for a period of time and fixed costs are fully written off against the total contribution, which is the value of sales less variable costs....
5 Pages (1250 words) Research Paper

Accounting Information in Decision Making

decisions adopted by a business defines it success.... The management can use earlier examples to develop concrete decisions.... Engaging accounting information is an idea of great magnitude in decision-making.... ccounting provides facts essential for understanding the subject under question… accounting Information in Decision Making Outline i.... Role of managerial accounting in providing information to aid individual and group decision-making a....
4 Pages (1000 words) Essay

Fads and Fashions in Management Accounting

There are different methods that have emerged because of management accounting and some of these techniques are; Activity Based Costing (ABC), Grenzplankostenrechnung (GPK), Resource Consumption Accounting (RCA), etc.... However, management accounting and in particular activity based costing has changed the scenario and now accounting information is used by management to make important decisions to not only improve the profitability but to also improve the performances of the organizations....
4 Pages (1000 words) Essay

Accounting Ratio Analysis for Decision-Making at British Petroleum

nbsp; An analysis of financial principles relating to accounting and cash ratios will be examined using a combination of modern and historical sources for the purpose of literature meta-analysis.... Accounting ratio analysis for the enhancement of management of decisions: A British Petroleum case study.... Details concerning organizational functionality will be discussed as well; with an explanation concerning potential pitfalls incurred through management and accounting failures....
38 Pages (9500 words) Dissertation

The Role of Cost Accounting in Business Planning, Control, and Decision Making

Technological changes and management innovations are drastically changing the nature of costs.... The cost and management accounting is responsible for generating financial information required by the firm for internal and external reporting.... Today, the scope of cost accounting has enlarged to such an extent that it now refers to the collection and providing all sorts of information that assists the executives in fulfilling the organizational goals....
5 Pages (1250 words) Essay

Management Accounting

This work named "management Accounting" describes the concept of relevant costing, peculiarities of buying decision, the role of investment in order to get benefit from this case.... The work outlines the main factors of making a decision properly due to all the rules of management accounting.... In the make or buy decision, the management accountant undertakes a cost-benefit analysis.... nbsp;… The paper gives detailed information about the cost system -  the base for ascertaining the profit of manufacturing or trading operations....
8 Pages (2000 words) Assignment

Management Accounting Assignment Help me

Actual attendance increased by 15 more persons, totaling to 85 persons. Management by exception… egates routine decisions to lower level managers, unburdening top level managers from making decisions that have minimal or quite insignificant implications to the organization.... If this is being practiced by the fraternity that hosted the event, the analysis of the variance may e left to accounting staff who is tasked only to report the variance with a simple explanation that the increase in the expense was due to increase in guest...
3 Pages (750 words) Essay

Cost, Budgets and Strategic Decision Making in Management Accounting

management accounting focuses on the identification, measurement of relevant information.... Similarly, management accounting includes the interpretation of the gathered cost, revenue and other relevant financial… management accounting includes communicating information to the affected employees.... Budgets are important management priorities. The operating budget is done in several consecutive steps (Debarshi, 2011)....
5 Pages (1250 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us