Accounting and Planning at Ford Motor Company

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Accountingand Planning at Ford Motor Company

Accountingand Planning at Ford Motor Company

AnAmerican automaker, Ford motor company is one of the largestcarmakers globally. The company owns some stake in other automakersacross the world such as Mazda, Jiangling, and Aston Martin. Ford wasthe first firm to introduce large-scale production of cars as well asthe organization of industrial labor force by utilizing engineeredsequences. Although the company almost went into bankruptcy duringthe 2007-2008 financial crisis, it has since experiencedprofitability. In its evolutionary stages, Ford motor company managedto develop new models of vehicles to technologically advancedvehicles. The company continues to utilize technology to design andproduce cars, a move that has seen the production of electric drivecars and flexible fuel cars. A close friend works at the companythus, the decision to highlight management accounting at the companyin both production and marketing.

Managerialaccounting is an important aspect and process at Ford since it allowsproduction managers to identify the key aspects of a specific vehicleor line of production. Madegowda (2007) and White et al. (2011)assert that managerial accounting helps managers to utilizecost-benefit analysis processes thus, they identify key businesssuccess factors. In this regard, the company uses its managerialaccounting to collect information that helps in the designing andproduction of cars. The managerial accounting helps the managers inthe organization in making decisions that affect the daily operationof the company (Hermanson, Edwards, &amp Invacevich, 2011). In thisregard, managerial accounting facilitates the process ofdecision-making within the company. The manager makes decisions awareof the implications of the procedure to follow. Thus, managerialaccounting helps in establishing effective processes as well asregulating the production of products. To the employees, themanagerial accounting facilitates them with a prediction of how muchthey are likely to receive in the form of pay raise (Martin, n.d.). The shareholders of the Ford motor company vehicle company makedecisions that affect the marketability of their products, based onmanagerial reports presented by the managerial accountants. Fordutilizes managerial accounting in establishing control processesthrough the management, which has allowed the company to regulateproduction and productivity of the employees. Managerial accountinghas also assisted in internal audits, cost controls, acquisitions,and budget controls. It is worth noting that managerial accountinghas helped the company to evaluate the different aspects to businesssuccess factors and strategies thus, the company has managed toremain profitable. The automobile industry include numerous andhighly-effective firms thus, without managerial accounting, anorganization cannot experience development.

Managerialaccounting acts as a supervising agency to other management functionswithin an organization. It facilitates the development of betterorganizational management strategies in an organization. Managementaccounting helps an organization to plan, makes decision, assessescosts, prepare budgets, and control processes (Martin, n.d.). Like inother organizations, management accounting has helped Ford establishobjectives and formulate effective approaches that helps attain theidentified objectives. Moreover, the management use the concept tomakes decisions relating to production and marketing as well asevaluates budgets, information, and controls. Hermanson et al. (011)contend that organizations must use management accounting to recordinformation and then use the information to carry cost-benefitanalysis regarding productions and marketing. In this regards, Fordhas utilized management accounting to identify costs and benefitsaccruing to the production of a specific line of vehicles.


Madegowda,J. (2007). ManagementAccounting.GlobalMedia.

Martin,J. R. (n.d.) Management accounting: concepts, techniques, andcontroversial issues – Chapter1: Introductionto managerial accounting, cost accounting and cost management system.Retrieved 27 March 2016 from

Hermanson,R.H., Edwards, J.D., &amp Invacevich, S.D. (2011). Accountingprinciples: A business perspective.First Global. Retrieved 27 March 2006from&nbsp

White,L., Clinton, B., van der Merwe, A., Cokins, G., Thomas, C., Templin,K., &amp Huntzinger, J. (2011). Why We Need a Conceptual Frameworkfor Managerial Costing. StrategicFinance,93(4), 36-42.