Week 2- Discussion Forum Unit 2

University of the People

BUS 5110: MANAGERIAL ACCOUNTING

Dr. by Jamal Boubetana

Description of the company and its products.

Goodyear Tire & Rubber Company is an American multinational tire

manufacturer founded in 1898 in Ohio, USA (Goodyear Tire and Rubber

Company, 2021)

Manufacturing costs borne by the company:

According to Mr. Heisinger and Mr. Hoyle in their book “Accounting for

Directors,” manufacturing cost can be defined as all costs related to

manufacturing. It is categorized into 3 categories: direct costs, direct labor, and

overheads.

Goodyear mainly uses synthetic and natural rubber as its raw materials. The

company also uses steel wire, fabrics, and petrochemical-based goods to produce

tires. These will be direct costs (Goodyear Tire and Rubber Co., 2021).

Direct labor would be the workers who would gather all materials in the plant and

mix the products. There are those who touch the materials and turn them into their

final products (Heisinger, K., & Hoyle, J.B, n.d.),

The overheads are as follows:

● Indirect materials: screws, adhesives, ...

● Indirect employment: factory supervisors. They participate in the production

process, but their time in the products cannot be easily traced.

● Other manufacturing costs: All costs associated with the plant including

equipment, maintenance, insurance, and facilities.

Also, the prices are divided into:

1- Variable prices
Variable costs are costs that differ in direct proportion to changes in the level of

activity and production. Example of variable costs: direct materials, direct labor,

and indirect materials. (Walther, L.M & Skousen, CJ, 2009)

2- Fixed price

It does not fluctuate with changes in the level of activity, regardless of production,

an example of that rent remains the same. (Walther, L.M & Skousen, CJ, 2009)

Mixed costs:

For mixed costs, it contains a mixture of fixed and variable components. Example

of mixed costs: utilities (like mobile phone bills) and maintenance costs. (Walther,

L.M & Skousen, CJ, 2009)

REFERENCES:

Tire manufacturing industry, analyzing the cost and margin trends - Blogs. (2017).

Retrieved from https://www.televisory.com/blogs/-/blogs/tire-manufacturing-industry-

analysing-the- cost-and-margin-trends.

Walther, L. M. & Skousen, C.J. (2009). Managerial and Cost Accounting.

https://library.ku.ac.ke/wp-content/downloads/2011/08/Bookboon/Accounting/managerial-and-

cost-accounting.pdf

Goodyear Tires (2020). Retrieved from

https://www.goodyear.com/en-US/international? expand=international

Goodyear Tire and Rubber Company. (n.d.). Retrieved from

https://en.wikipedia.org/wiki/Goodyear_Tire_and_Rubber_Company

Heisinger, K., & Hoyle, J. B. (n.d.). Accounting for Managers. Chapter 1 – What is
Managerial Accounting?
https://2012books.lardbucket.org/books/accounting-for-managers/index.html