Identify A Publicly Traded Manufacturing Company ✓ Solved

Identify a publicly traded manufacturing company. BY publicly traded

Identify a publicly traded manufacturing company. By publicly traded it means they have stock traded on an exchange such as the New York Stock Exchange. Research a product they manufacture. Based on what you have found would they use process costing or job order costing? Why did you select the method they did? Integrate terms and concepts learned in week three and four as you describe the cost accounting system they might use.

Paper For Above Instructions

In today’s global economy, manufacturing companies play a crucial role in producing goods, impacting both local and international markets. This paper identifies a publicly traded manufacturing company, explores one of its primary products, examines the costing method it employs, and integrates relevant cost accounting concepts.

Company Overview

The selected publicly traded manufacturing company is General Electric (GE), which trades on the New York Stock Exchange under the ticker symbol GE. Founded in 1892, GE has established itself as a leader in various sectors, including power generation, aviation, renewable energy, and healthcare technologies. Its extensive portfolio showcases its commitment to innovation and quality production.

Product Analysis

One of the significant products manufactured by General Electric is the GE9X jet engine, designed for the Boeing 777X aircraft. As of the latest information, the GE9X is touted as the world's largest and most efficient jet engine, pushing the boundaries of aerospace technology. It boasts advanced materials and technologies that lower emissions and enhance fuel efficiency. Given its complexity and the level of customization required to meet specific customer demands, the costing method for the GE9X engine analysis is crucial.

Costing Method: Job Order Costing vs. Process Costing

In examining the production of the GE9X jet engine, it is essential to evaluate which costing method—process costing or job order costing—is appropriate. Job order costing is utilized when products are manufactured based on specific customer orders and where the costs can be distinctly assigned to each job or order. In contrast, process costing is appropriate for manufacturing processes that create indistinguishable products in mass production environments.

Given that the GE9X jet engine is highly customized and produced in relatively low volumes compared to mass-produced items, General Electric employs the job order costing method for this product. Each engine is distinct in specifications and design to meet particular airline standards and engine performance requirements. As a result, GE allocates costs to each engine project individually, tracking materials, labor, and overhead specific to each job.

Rationale for Job Order Costing

There are several reasons why General Electric adopts job order costing for the GE9X jet engine:

• Customization: Each engine is manufactured according to specific customer requirements, necessitating a distinct cost assignment.
• Individual Job Tracking: Job order costing allows GE to accumulate costs relevant to each order, ensuring precise tracking of expenses, including direct materials, direct labor, and allocated manufacturing overhead.
• Complexity: The intricate design and engineering of jet engines require thorough planning and resource management. Job costing facilitates detailed tracking of expenses attributed to engineering, design alterations, and production variations.
• Comparative Analysis: By utilizing job order costing, GE can easily analyze the profitability of individual engine orders, supporting more informed decision-making and future pricing strategies.

Cost Accounting Concepts Integration

To further understand the application of job order costing within General Electric, it is necessary to integrate concepts discussed in weeks three and four of the accounting program. These weeks typically encompass various essential principles such as the accumulation of manufacturing costs, the flow of costs in job order costing, and the impact of cost allocation on pricing and profitability. Job order costing involves collecting costs associated with individual jobs, using documents like job order sheets that record direct materials and labor costs. Manufacturing overhead can be allocated based on predetermined rates derived from historical data, making the process systematic and predictable.

Furthermore, overhead costs must be applied appropriately to maintain accurate pricing dynamics. This is especially important in a high-stakes industry like aviation, where competitive bidding is common, and profit margins can be razor-thin. General Electric’s meticulous approach to job order costing ensures that all costs are accounted for, enabling realistic pricing strategies while preserving profitability under specific contracts.

Conclusion

In summary, General Electric is a prime example of a publicly traded manufacturing company that utilizes job order costing for its highly customized products like the GE9X jet engine. This approach allows the company to track costs accurately, is integral to their production process, and takes into account the unique specifications and complexities associated with aerospace manufacturing. Understanding and applying the appropriate costing method is crucial for effective financial management and strategic planning within any manufacturing entity.

References

• General Electric. (n.d.). About Us. Retrieved from https://www.ge.com/about
• Boeing. (2022). 777X Overview. Retrieved from https://www.boeing.com/commercial/777x/
• Horngren, C. T., Datar, S. M., & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis. Pearson.
• Drury, C. (2018). Management and Cost Accounting. Cengage Learning.
• Heisinger, K., & Hoyle, J. (2017). Managerial Accounting. Wiley.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting. McGraw-Hill.
• Blocher, E. J., Chen, K. H., & Cokins, G. (2019). Cost Management: A Strategic Emphasis. McGraw-Hill.
• Gordon, L. A., & Fischer, M. (2018). Cost Accounting. John Wiley & Sons.
• American Institute of CPAs. (2020). Job Order Costing. Retrieved from https://www.aicpa.org/
• Investopedia. (2021). Job Order Costing. Retrieved from https://www.investopedia.com/terms/j/job-order-costing.asp