Research Assignment What type of cost system to use?

In the BusinessWeek article “How Would You Like Your Ford?” Kathleen Kerwin reports on ways Ford Motor Company is changing procedures used to produce some of its car models. Read this article, which appears on page 34 of the August 9, 2004, issue, and complete the following requirements.

Required

a. Should Ford use a job-order, process, or hybrid cost system to account for vehicles produced in its new flexible-manufacturing system? Explain.

b. The article mentions that Ford’s flexible-manufacturing system relies in part on 11 major component suppliers locating near its own plant. When Ford receives an item from one of these suppliers, should its cost be considered a raw material cost or a transferred-in cost?

c. Ford expects its new production setup to reduce its manufacturing cost in several ways. Identify and briefly explain these cost reductions.