Scribd
Upload
154 views3 pages

ACC202 Module Three Assignment

Harley Davidson was founded in 1903 and is an iconic American motorcycle manufacturer. It produces motorcycles that were used in World Wars I and II and became famous when featured in films. Harley Davidson can use both job order cost accounting and process cost accounting due to producing custom and bulk orders, and it may use activity-based costing to avoid product cost distortion between different models.

Uploaded by

Karli Kulp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
154 views3 pages

ACC202 Module Three Assignment

Harley Davidson was founded in 1903 and is an iconic American motorcycle manufacturer. It produces motorcycles that were used in World Wars I and II and became famous when featured in films. Harley Davidson can use both job order cost accounting and process cost accounting due to producing custom and bulk orders, and it may use activity-based costing to avoid product cost distortion between different models.

Uploaded by

Karli Kulp
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Karli Kulp

ACC 202 Module Three

Harley Davidson is an American motorcycle manufacturing company. (About Harley-

Davidson | Harley-Davidson USA, 2022) It was founded in 1903 by two friends, William Harley

and Arthur Davidson, who decided to add engines to their bicycles. From there, an icon emerged.

The company produced motorcycles that were used in both World War I and World War II.

Their fame exploded when Evel Knievel used Harleys to make his stunt jumps and the bikes

were featured in the film Easy Rider. They have faced challenges throughout the last 100 years,

including a declining customer base. They have attempted to move with the times by refocusing

back to the products that made them famous. They have also developed smaller versions of the

motorcycles as well to attract younger buyers. (DeBord, 2019)

Companies can use different accounting methods based on their needs. Job order cost

accounting calculates the direct labor, direct materials and factory overhead that goes into each

individual job. (Warren & Tayler, 2020) This system is often used by companies that

manufacture more custom products, like Boeing (airplane producers). Job order cost accounting

can help identify which jobs are most profitable, highlight when there are defects and

inefficiencies, and allow for a base to be created for similar jobs that may come in the future.

When a company’s products cannot be differentiated from one another, a process cost

system is generally used. Companies that use this process include PepsiCo and Apple. (Warren

& Tayler, 2020) The costs are accumulated, summarized and then allocated to the units produced

during a specific time period. This system is generally less costly than a job order process

system, which requires new calculations to be made for each job.


Harley Davidson can use both methods of accounting for its business. For the bulk of the

manufacturing, it benefits from a process cost system. They do, however do custom orders on

many of the products, in which case they need to break down their costs using the job order cost

system.

There are several possible overhead costs that Harley Davidson may need to account for.

Some examples include repairs and maintenance for the manufacturing equipment, insurance for

the equipment, indirect labor costs, utilities for the production facilities, and indirect materials

costs. Because there are different models, they may choose to use an activity-based costing

system to avoid distortion in product costs. Some activity bases they may use in this process

include fabrication, assembly, setup, quality control and engineering changes. (Warren & Tayler,

2020)

I would recommend a hybrid method, defining the base cost of the motorcycles on the

process cost method and using the job order costing method as needed for specialty orders. The

business is too large to compute each bike’s cost individually. It makes more sense and will cost

less to use process costing as the main accounting method.


References

About Harley-Davidson | Harley-Davidson USA. (2022). Harley-Davidson. https://www.harley-

davidson.com/us/en/about-us/company.html

DeBord, M. (2019, August 19). Harley-Davidson has in business for 116 years — but the iconic

American company is facing numerous challenges. Business Insider Nederland.

https://www.businessinsider.nl/harley-davidson-company-history-photos-2019-5?

international=true&r=US

Warren, C., & Tayler, W. (2020). Managerial Accounting (Fifteenth Edition) [E-book].

You might also like