The agriculture and turf segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service parts, including: large, medium, and utility tractors; tractor loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; harvesting front-end equipment; sugarcane loaders and pull-behind scrapers; tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural management systems technology and solutions; and other outdoor power products.

The construction and forestry segment primarily manufactures and distributes a broad range of machines and service parts used in construction, earthmoving, road building, material handling and timber harvesting, including: backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; milling machines; recyclers; slip form pavers; surface miners; asphalt pavers; compactors; tandem and static rollers; mobile crushers and screens; mobile and stationary asphalt plants; log skidders; feller bunchers; log loaders; log forwarders; log harvesters and related logging attachments.

The products and services produced by the segments above are marketed primarily through independent retail dealer networks and major retail outlets.

The financial services segment primarily finances sales and leases by John Deere dealers of new and used agriculture and turf equipment and construction and forestry equipment. In addition, the financial services segment provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts and offers extended equipment warranties.

Raw Materials

John Deere purchases raw materials and some manufactured components and replacement parts for its equipment, engines and other products from leading suppliers both domestically and internationally. These materials and components include a variety of steel products, steel and iron castings, forgings, plastics, electronics and ready-to- assemble components made to certain specifications. John Deere also purchases

various goods and services used in production, logistics, offices and research and development processes. John Deere maintains strategic sourcing models to meet its production needs and build upon long-term supplier relationships. John Deere uses a variety of agreements with suppliers intended to drive innovation, ensure availability and delivery of industry-leading quality raw materials and components, manage costs on a globally competitive basis, protect John Deere's intellectual property and minimize other supply-related risks. Supply chain risks monitored by John Deere to minimize the likelihood of the supply base causing business disruption include supplier financial viability, capacity, business continuity, quality, delivery and weather-related events including natural disasters. In fiscal 2018, no significant work stoppages occurred due to shortages of raw materials or other commodities, but John Deere experienced an increasing number of supply chain disruptions linked to supplier material and labor shortages.

INVENTORIES

A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries are valued at cost, on the "last-in, first-out" (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the "first-in, first-out" (FIFO) basis, or net realizable value. The value of gross inventories on the LIFO basis at October 28, 2018 and October 29, 2017 represented 54 percent and 61 percent, respectively, of worldwide gross inventories at FIFO value. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 28, 2018 and October 29, 2017 in millions of dollars would have been as follows:

QUESTIONS:

5. In your own words, describe what would be included in work-in-process for Deere and Company.

1. Describe what would be included in finished goods for Deere and Company.

2. Is Deere and Company a Service, Merchandising, or Manufacturing firm? Explain, using two complete sentences that make sense.

3. The schedule below looks similar to Exhibit 2-13 on page 35 of our text. The computation is described at the bottom of page 34. Using the information from footnote for the inventory balances, compute the amount of Cost of goods manufactured. Cost of goods sold for the year ended October 28, 2018 is filled in for you. (12 points)

Deere and Company
Summary of Cost of Goods Sold
for the year ended October 28, 2018 amounts in millions
Cost of goods manufactured
Add: Beginning finished goods inventory (Oct. 29, 2017)
Cost of goods available for sale
Less: Ending finished goods inventory (Oct. 28, 2018)
Cost of goods sold	$ 25,571.2

9. The schedule below is similar to Exhibit 2-12 on page 34 of our text (starting with the first yellowed line). Using the cost of goods manufactured amount you computed in #8 above and the inventory balances for work in process from Deere and Companys footnote, compute Total manufacturing costs for the year. (12 points)

Deere and Company
Schedule of Cost of Goods Manufactured
for the year ended October 28, 2018 amounts in millions
Total manufacturing costs for the year
Add: Beginning work in process inventory (Oct. 29, 2017)
Total cost of work in process during the year
Less: Ending work in process inventory (Oct. 28, 2018)
Cost of goods manufactured

2018 2017 Raw materials and supplies $ Work-in-process Finished goods and parts 1,688 495 3,182 2,233 $ 776 4,777 7,786 1,637 6,149 $ Total FIFO value 5,365 1,461 3,904 Less adjustment to LIFO value Inventories