Managerial Accounting Research Paper free essay sample

Service Industries Essie Sullivan Professor Linda Chess Managerial Accounting April 25, 2013 Research a U. S. company in the service industry with e-commerce activities. Write a five to six (5-6) page paper in which you: 1. Describe the company you researched in one to two (1-2) paragraph. I have chosen to research the company of General Motors (GM), as a U. S. company in the service industry with e-commerce activities which uses Activity-based Costing. Following is General Motor’s history and heritage: General Motors is the one of the largest automaker in the world. Retrieved April 26, 2013 from http://www. manufacturing. gatech. edu/sites/default/files/uploads/pdf/Final%20version%20_Jan%2026%202http://www. manufacturing. gatech. edu/sites/default/files/uploads/pdf/Final%20version%20_Jan%2026%202012_. pdf. 012_. pdf. Additionally, GM has played a pivotal role in the global auto industry for more than 100 years. GM was created in 1897; the world’s love of automobiles started at the New York Auto Show in 1900. GM revolutionized from 1960-1979 offered forward-thinking answers to an increasingly eco-conscious world. Today, General Motors are passionate about designing, building and selling the world’s best vehicles. This vision unites the company as a team and is hallmark to their customer-driven culture. GM became a global force in 1980; the close of the 20th century brought tremendous global growth to GM. The company has also been an emotional cushion during the 1930-1959 as its commitment to innovation lent optimism during tumultuous world events. Moving forward, GM’s innovation and challenges of 2000-2008 trying economic times saw GM embracing an enduring passion for innovation. Retrieved April 26, 2013 from http://www. gm. com/company/historyAndHeritage. html. The General Motors Company’s address as follows: 300 Renaissance Center, Detroit, MI 48265-3000; website is http://www. gm. com. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC Opel Holden, and Vauxhall brand names etc. GM also sells cars and trucks to dealers, fleet customers, daily rental car companies, commercial fleet customers, leasing companies, and governments. Additionally, the company offers connected safety, security and mobility solutions and information technology services. Thus, the company through its subsidiary, General Motors Financial Company, Inc. provides automotive financing services and lease products through GM dealerships in connection with the sale of used and new automobiles that target customers with sub-prime and prime credit bureau scores. The global company has 213,000 (Two-Hundred Thirteen Thousands) full time employees; does business in 120 countries; total U. S. anufacturing plants is 43 and total U. S. vehicle assembly plants are 12. Its global policy is to â€Å"build where we sell,† which lowers vehicle cost for the consumer; additionally, company has announced investments at 30 U. S. facilities totaling more than $7. 1 billion, which created or retained 18,641 jobs; Monday, April 22, 2013, GM sold its 1 millionth vehicle in China, earliest it has ever done in a calendar year. Finally, it is a NYSE company stock symbol is GM, and founded in 1908. Retrieved April 26, 2013 from http://finance. yahoo. com/q/pr? s=GM+Profile. 2. Discuss how the time driven ABC cost system can be implemented in the company you researched and the benefits that the use will yield to the business performance. The time driven Activity-based Costing system can be implemented in the General Motors Company for allocating overhead costs. Specifically, ABC allocates overhead to multiple activity cost pools, and then assigns the activity cost pools to products and services by means of cost drivers; basically, this means an activity is any event, action, transaction or work sequence that incurs cost when producing a product or providing a service. Therefore using the ABC cost system with GM would be ideal; since company is a vehicle base with a variety of makes and models driven by sales. Additionally, it would be able to track how many Cadillacs, Buicks, Chevrolet, Crossovers, Trucks, Vans, and SUVs in stock, sold, demonstrations of new vehicle rollout-First-in, Last-out-inventory, GM’s massive database of customers, employees, vendors, suppliers, manufacturing plants and or cost centers. Moreover, the ABC costing system creates a more accurate cost distribution. Also, it would be helpful in creating the accuracy for the Cost of Manufacturing Schedule, Income Statement, and Balance Sheet; and this as well would allow investorsstockholders to study the company’s sales, stability, and trends of General Motors. Retrieved April 26, 2013 from ‘Managerial Accounting’ pg. 147. Now benefits are as follows: GM, primarily, would benefit through an assessment of more accurate product costing as regarding sales of vehicles, parts, services, raw materials, direct labor, manufacturing overhead, and sales events, etc. Additionally, it would lead to more cost pools whereas grouping each vehicle make and model in a category. Also, costs would basically be assigned more directly on the basis of the cost drivers used to produce each product; and in GM case, vehicles. Thus, ABC leads to better management decisions for GM; whereas more accurate vehicle sales, raw materials, direct and indirect labor, and overhead manufacturing should contribute to setting selling prices that can achieve desire product profitability levels. As a matter of fact, it would product more accurate cost data which entails deciding whether to make a vehicle or vehicles or buy parts or components or to even eliminate a vehicle, parts or component. It would also allow managers to better understand cost behavior and the overall profitability for the company. The ABC system makes a great financial management software for GM in its enormous scope of business, globally. Retrieved April 26, 2013 from ‘Managerial Accounting’ pg. 155. 3. Assess how using an ABC system can provide a competitive advantage to the company in the market space it operates and the resulting impact to the business performance. ABC system for GM would provide a greater support for financial, operational, and strategic decisions. Since the Internet is the World Wide Web, with more than 2 million people online daily, it would provide a greater opportunity to reach 8 million more potential customers, affluent, and all other social-economic classes. Moreover, implementing the ABC system would allow management a competitive advantage to better organize the GM’s manufacturing activities in a more accurate and meaningful way as a vehicle manufacturing base. Also as a competitive advantage in using the ABC Costing system would be allow GM’s Managers to collect data of vehicles, activities of product, services, employees, raw materials, direct and indirect labor and manufacturing overhead cost; and collecting sales data for preparing Cost of Goods Manufacturing Schedule, Income Statement and Balance Sheet and Cash Flow. Retrieved April 26, 2013 from http://www. imanet. org/PDFs/Public/MAQ/2011_Q2/mag_spring_stout%20(1). pdf. 4. Examine the potential impact of time-driven ABC costing on services provided online with those provided through traditional channels, considering how this knowledge will impact decisions made by management about these services. With GM’s vehicle manufacturing base, the time-driven ABC costing online community or presence would provide a greater support for financial, operational, and strategic decisions. Online e-commerce would enhance the shopping experience for consumer, more so than traditional channels of the ABC system (which relied on employee survey of time spent on specified activities, which was burdensome and time consuming); which ultimately improve manufacturing and distribution efficiency and lower costs. Additional, as GM is a global entity or entities, as about 2 million consumers used the Internet last year to assist in their purchase of a new car or truck. Considering the future, the figure should reach 8 million or more leading to about 500,000 vehicles bought directly over the Internet. GM’s online slogan is â€Å"We want to play aggressively in this business†, and â€Å"We want to wins†. Thus, one of GM’s main thrust using the Internet is to reach out to more affluent and younger buyers. Retrieved April 26, 2013 from http://www. imanet. org/PDFs/Public/MAQ/2011_Q2/mag_spring_stout%20(1). pdf. Retrieved April 26, 2013 from http://articles. latimes. om/1999/aug/11/business/fi-64581. Works Cited Activity-Based Costing Applied to Automotive Manufacturing. Retrieved April 26, 2013 from http://www. manufacturing. gatech. edu/sites/default/files/uploads/pdf/Final%20version%20_Jan%2026%202http://www. manufacturing. gatech. edu/sites/default/files/uploads/pdf/Final%20version%20_Jan%2026%202012_. pdf. 012_. pdf. Company: History amp; Heritage. . Retrieved April 26, 2013 from http://www. gm. com/company/historyAndHe ritage. html. Profile. General Motors