Ford Motor Management Accounting - 3056 Words

Case Study Report- Ford Motor Introduction Ford Motor Company (Ford) is an American multinational corporation which produces cars and trucks. The automaker was founded by Henry Ford and incorporated on June 16, 1903. Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce, using elaborately engineered manufacturing sequences typified by moving assembly lines. In the first part of report, we will analysis the financial issue of how Ford Motor Company deals with the largest slump in sales on 2008. This will be examined in the aspect of†¦show more content†¦The assumption is based on high proportion of labor cost (fixed expense) involved in automobile company for assembly purpose. With a large scale of lay-off, the fixed expense reduced in higher proportion which causes the break-even point (=Fixed expense/Contribution margin) reduced. This requires another assumption that the decrease of variable expense has offset a part of decrease on sales so that the decrease on contribution margin is smaller. With higher reduction of fixed expense than that of contribution margin, the break-even point is smaller and therefore the net operating loss is reducing with easier achievable target. From the annual report of 2008 to 2010, the net operating loss is reduced from $14.6 billion to net profit of 6.557 billion, an increase of 144.9%. Table 1: Summary of CVP analysis | |Increase/Decrease |Explanation | |Sales |Decrease (Larger) |Price and Volume decreases | |Less: Variable expense |Decrease |Sell unprofitable brand | |Contribution Margin |Decrease (smaller) |Larger decrease in sales | |Less: Fixed Expense |Decrease (larger) |CostShow MoreRelatedFord vs Toyota Essay935 Words   |  4 PagesFord vs. Toyota Ford Motor Company is the second-largest automobile company in the world. Fords main focus is automobiles; however, they also operate in Ford Credit and Hertz Corporation. Ford also has controlling interest in Mazda Motor Corporation. Ford was established June, 1903; in an old wagon factory in Detroit Michigan. In 1903, Ford began production on a two-cylinder, 8 horsepower called the Model A. They produced a total of 1,708 of these cars in their first year of operation. ToyotaRead MoreLean Vs. Lean Manufacturing Industry1049 Words   |  5 Pages Lean accountings primary use is in the manufacturing industry. 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