Managerial Accounting John Deere Component Works Essay

Managerial Accounting: John Deere Component Works John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system. Q1. How did the competitive environment change for John Deere Company between the 1970 and 1980?†¦show more content†¦Ã¢â‚¬ ¢ This cost method does not provide the best system for JDCW’s cost allocation. By using only three overhead rates the present system grossly undermines the true production costs since other activities of the production process are not acknowledged. †¢ The system also fails to compute material usage variances, which only further discredits the accuracy of the accounting cost structure. For more accurate measure of material usage, the quality assurance department must include this variance calculation in its weekly report. †¢ A further weakness is that the accounting department issues reports that only indicate how each area operates, rather than evaluating the performance of each area, which would prevent a constriction in cost efficiency. These weaknesses prevent JDCW from accurately accessing its true costs. Q3. How were the limitations of the existing cost system overcome by the ABC Cost System? What are the implications of the ABC system? Essentially, with the current cost system, the managerial analysis is highly flawed due to a lack of crucial in-depth cost information, as indicated by: 1) JDCW already had three cost pools with appropriate cost drivers for each; 2) JDCW distinguished variable (direct) and non-variable (period) overhead; 3) JDCW did not fall in the trap of charging under-capacity utilization out to current production levels (i.e., they used normal volume in the denominators of theirShow MoreRelatedJohn Deere Component Works Essay1171 Words   |  5 PagesCASE ANALYSIS REPORT Managerial Accounting: John Deere Component Works. John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has toRead MoreImportance of Accounting Knowledge2202 Words   |  9 Pagesï » ¿Introduction Accounting knowledge is important and helpful for almost anyone who works in any business capacity. It complements and enhances almost any other job that one has in that company. For someone seeking to be promoted to management or supervisory role, knowledge of accounting is, almost always, a must since so many of the responsibilities devolve around accounting. That this is so is demonstrated by the following essay that shows how my current career of IT Integrator in SAP at John Deere DubuqueRead MoreJohn Deere Case Study1776 Words   |  8 PagesThe following report is a consultation analysis of John Deere Component Works costing structure. 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Kathryn Dulanski—kdulanski@hotmail.com Bethany Dutes-- bdutes@my.devry.edu Eugenia Greaves-- Greaves92@hotmail.com Tracy Miller-- miller.tracy27@yahoo.com Sherry Montgomery-- sherry.montgomery@hotmail.com Keller Graduate School of Management HR600 Human Resource Planning February 24, 2011 Brian Nisbet Table of Contents Background Introduction Outline and Review of HRIS Systems Explanation of Manpower and TechnologyRead MoreProposal Marketplace4093 Words   |  17 Pagesand the competition is working hard to take away your business. In The Marketplace, participants start up and run their own company, struggling with business fundamentals and the interplay between marketing sales, RD, production, finance and accounting. Participants are given control of a simulated business and must manage its operations through several decision cycles. 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The abstract is typically a short summary of the contents of the document.] compaq [Type the company name] [Pick the date] Contents Concept of Cost Accounting†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦03 Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..03 Traditional costing v/s activity based costing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..04 Need for an Activity Based Costing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦06 Stages in Activity Based Costing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Read MoreRoles of Information Technology in Purchasing8283 Words   |  34 PagesChapter 3 Purchasing and e-Procurement 3.1 The Role of Purchasing 3.1.1 Introduction to purchasing The role of purchasing is to obtain raw material, components, parts, as well as information that are needed for the production of goods or providing services. The purchasing process includes many aspects, such as request for quotation (RFQ), supplier market analysis, supplier selection, contract negotiations, and purchase plan implementation. The purchase function plays a liaison role between variousRead MoreCooper and Kaplan8171 Words   |  33 PagesRobert S. Kaplan, How Cost Accounting Systematically Distorts Product Costs, Management Accounting (April 1988), pp. 20-27. A more comprehensive explanation of the impact of diversity and complexity on indirect costs was presented in the series (k Journal dfCoat Management articles by Roltnn Cooper, The Rise ofActivity-Based Cost Systems: Parts I-IV (Summer 1988, Pall 1988, Winter 1989, and Spring 1989). ^See, for example, Robert S. Kaplan, John Deere Component Works (A) and ( B), HBS Cases # 9-187-107