3-2 Assignment-Costing Methods (1)

School: Southern New Hampshire University - Course: ACCOUNTING 202 - Subject: Accounting

Company Overview Company Name: Ford Motor Company Overview: Ford Motor Company is an American multinational automobile manufacturer that was founded by Henry Ford on June 16, 1903 (Ford Motor Company, n.d.). Fords headquarters is in Dearborn, MI. Ford produces automobiles, luxury vehicles (under Lincoln), commercial vehicles, automotive parts, pickup trucks, and SUVs (F.N - Ford Motor Company | Stock Price & Latest News | Reuters, 2022). The Ford Model T was used in WWI as an ambulance, delivery truck and for artillery transportation. The Ford Motor Company is still family owned. In 2008 the company produced 5.532 million automobiles and employed 213,000 people in 90 facilities around the world (Ford Motor Company, 2008). Ford has manufacturing plants located in Asia-Pacific, Europe, North America, South America, the Middle East, and Africa. Ford introduced the large-scale moving production assembly lines that are used in manufacturing companies around the world today. Some of Fords competitors are Dodge, General Motors, Fiat Chrysler Automobiles and Nissan. Costing Methods: (Vaidya, 2022) Job Order Costing MethodProcess Costing Method Used for small productionUsed for large production More record keepingLess record keeping Used for specific or unique productUsed for uniform production Each product or job has traceable costCost is determined by equivalent units produced The Job Order Costing Method is applied when products are small and unique. The Job Order Costing Method tracks direct materials, direct labor and manufacturing overhead (Vaidya, 2022). This allows for each job to be looked at individually to provide a plethora of information. This can allow management to divert resources from low profitable areas to other areas. In Ford Motor Company, the Job Order Costing Method could be used when making customized vehicles or making a limited luxury car. This would allow for the direct material, direct labor and manufacturing overhead to be accounted for individually based on each luxury vehicle built. When standard products are manufactured, the Process Costing Method can be used. The Process Costing Method is used for large scale manufacturing. The Process Costing Method helps determine the total production cost for each unit of product (Vaidya, 2022). The product costs are allocated to the department each item passes through instead of tracing the cost to each individual item produced. Since the Process Costing Method is used for mass production, Ford Motor Company can use this method for the mass production of its vehicles such as the mass production of pickup trucks at their plant in Louisville, Ky.