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.
A local country club runs a very successful “19th Hole” that golfers frequent for a few drinks after a round of golf. The club also offers hot snacks to these golfers but the overhead of the food operation appears to be excessive. The new Golf Pro argues that the food operation should be discontinued because it is losing money and dragging down the net income of the club and thus affecting his bonus. As a management accounting student and a weekly golfer, what advice would you offer the Pro?
