(BQ) Part 2 book “Financial accounting” has contents: Reporting and interpreting liabilities, analyzing financial statements, statement of cash flows, reporting and interpreting owners’ equity, reporting and interpreting bonds, reporting and interpreting investments in other corporations, and other contents. | 5/14/08 3:39 PM Page 337 Confirming Pages C H A P T E R REPORTING AND INTERPRETING COST OF GOODS SOLD AND INVENTORY 7 he Harley-Davidson eagle trademark was once known best as a popular request in tattoo parlors. Now, following 21 consecutive years of growth in sales and profits, Harley-Davidson still faces a problem that most other companies envy. Though the Milwaukee-based company increased annual motorcycle production from 37,000 to 349,000 in that period, meeting customer demand is still difficult. They dominate the heavyweight motorcycle market in North America with a FOCUS COMPANY: market share. To close the gap between supply and demand for its products, Harley-Davidson spent $ billion over the last five years to expand and imBUILDING A LEGEND INTO A WORLD-CLASS prove its production facilities in Wisconsin, Missouri, and Pennsylvania. MANUFACTURER However, increasing production numbers is only part of Harley’s strategy. It is introducing new and improved products to stay ahead of major competitors Honda, Yamaha, and BMW. It also focuses on controlling inventory quality and cost to maintain gross profit margin. Empowering, educating, and training both salaried and unionized employees; establishing long-term, mutually beneficial relationships with its suppliers; and developing accounting information systems that provide real-time inventory and order information are keys to many of these efforts. Furthermore, selection of appropriate accounting methods for inventory can have a dramatic effect on the amount Harley-Davidson pays in income taxes. Continuous improvement in product development, manufacturing, inventory management, and information system design will be necessary for the HarleyDavidson eagle to continue its rise. T Harley-Davidson, Inc. U N D E R S TA N D I N G T H E B U S I N E S S Concerns about the cost and quality of inventory face all modern manufacturers
