Bradley describes the Ford Motor Company and activity-based costing. He describes the Ford Motor Company as a dominant company within the automotive manufacturing industry, and uses research performed by Egger and Bangers (1998) to define activity-based costing as a tool that measures costs based on segmented activities. Jonathan effectively uses the study to capture the advantages of activity-based costing, and gainfully applies these findings to Ford Motor Company. He illustrates how the use of activity-based costing would support the company’s critical success factors by increasing quality levels and improving cycle time.
Additionally, Jonathan explains how the utilization of this Contemporary Management Technique would aid Ford Motor Company in effectively dividing costs based on activity, which would allow the company to ensure maximum efficiency throughout all activities. Despite Jonathans knowledgeable response to the discussion board, there are areas which could have been further explored. For example, it would have been beneficial to discuss traditional costing in comparison to activity-based costing. Pan, Braid, and Blair (2014) describe traditional costing as identifying company costs based on the degree of the cost driver (p. 2). By comparing this to activity-based costing, Jonathan would further support and certify his opinion. Additionally, he could have researched studies that specifically analyze activity-based costing on companies within the automotive manufacturing industry. For instance, Anderson (1995) conducted research to identify the impact of General Motor’s adaptation to activity- based costing through the use of company archives and employee interviews (p. 23-24). The use of studies like this would add credibility to Jonathans recognition of a positive correlation between activity-based costing and Ford
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Motor Company’s success. Using these supporting topics would illustrate a comprehensive understanding of the technique and its application. Overall, Jonathan successfully described how activity-based costing would be a driving force for the success of Ford Motor Company, and he effectively answered the questions asked in the assignment.