Assignment 4: Research Application

Running head: RESEARCH APPLICATION 0

Kesha McDaniel

Georgette Thorpe

March 18, 2017

Research application

Identify and classify the types of expenses associated with the operation of the selected organization.

The company that I am going to use for my assignment is General Motors which is a manufacturing company. General Motors Company,usually known as GM, is an American multinational company with its headquarters in Detroit, Michigan. The company designs, produces, promotes, and distributes cars and their parts, as well as selling of financial services. General Motors manufactures cars in 37 nations under 13 brands (Davis, 1999). The company has several joint ventures, including in China, Russia, Pakistan, Egypt, India, and South Africa. General Motors hires 212,000 individuals and performs business in more than 120 nations. General Motors is segmented into five business divisions which are GM financial, GM South America, GM International Operations, GM North America and Opel Group.

Manufacturing companies are involved in obtaining raw materials, manufacturing finished goods and then the promoting and selling of these goods. All of these activities need costs to be incurred. These costs are usually categorized by these companies as manufacturing and non-manufacturing expenses. Manufacturing expenses are the costs that are directly concerned in the production of goods. Non manufacturing expenses on the other hand are the expenses that are not used when producing a product. One type of expense that is associated with the operation of this company is direct materials costs. The different car parts that are integrated to make a complete car are the raw materials. Another expense that is associated with the operations of general motors’ is the direct labor cost. These are the costs that can be fundamentally traced to specific product units. The costs of labor of an assembly line for instance in the company is a direct labor expense. Another expense that can be linked to the operations of general motors’ is manufacturing overhead expenses. These expenses of manufacturing costs include all the costs of manufacturing apart from the direct labor and direct material costs. The examples of manufacturing overhead expenses include items like manufacturing facilities insurance, indirect labor, indirect materials. Depreciation, property taxes, repairs and maintenance of equipment as well as light and heat. The other expenses associated with the operation of general motors’ are non manufacturing costs which include selling and marketing costs and administrative costs. The selling and marketing expenses include all the costs required to secure client orders and get the finished goods into the hands of consumers. Such expenses that general motors’ incurs include sales salary, sales commissions, shipping costs and advertising costs. Administrative expenses include all the clerical, organizational and executive costs that are linked to the general management of the company as opposed to selling, marketing and manufacturing. Examples of these expenses include management compensation, public relations, secretarial, general accounting costs and other like costs that are involved in the general administration of the company as a whole.

Review the income statement and balance sheet of the selected organization. What is your overall initial impression of the company based on the financial data you reviewed?

According to the financial data of general motors, the company has been reporting yearly profits ever since 2010. It earned 4.7 billion dollars in 2010. Tax break, including costs related credits to pensions and other expenditures have been projected to be worth as much as 45 billion dollars over the next 20 years.In 2010, the company was ranked second on the record with 8.5 million units manufactured globally. This year, Fortune reported that the company directed a 1billion dollars equity financing in the hauling network company. This gave me a good impression of the company, a company that is profitable.

References

Davis, M. (1999). General Motors: a photographic history. Charleston, S.C: Arcadia Pub.

Weygandt, J., Kieso, D. & Kimmel, P. (2010). Managerial accounting: tools for business decision making. Hoboken, NJ: Wiley.