4-1 sproul

Below is the question and student rsponse. Reply to the students response in 150 words

Question

 In its advertising, Ford Motor Company says "Quality is Job One." Ford is indicating that good quality is the most important consideration for its customers. This would include customer satisfaction on delivery dates and specific areas of car performance, including properly closing doors, and defect rates. Explain how Activity Based Costing can help supply this information to Ford's management. 

students response 

Activity based costing is used by managers within companies to assign costs to overhead activities that require time and resources so they can be quantified and added to the costs of products. 

Ford management can use Activity-Based Costing to supply this information by using the change in activity levels as measures of things like customer satisfaction, product production cost, average time required to properly produce a finished good in a specific department(ex: time required for the upholstery employee to properly sew a leather seat) and other important factors in producing good results.

With Activity-Based Costing, a manager can assess the cost required in the indirect manufacturing processes of a product and then decide if they need to reduce this overhead activity to save on costs, or, in the cast of Ford, they can use this information to accurately estimate the time and cost required to produce the acceptable standard for a product and plan around these time-cost variables.