In the last decade, Boeing has made several significant changes to its accounting system. None of these changes were for reporting to external parties. Management believed, however, that the new system gave more accurate costs of the airplanes and other products produced.

Requirements

1. Boeing had been a very successful company using its old accounting system. What might have motivated it to change the system?

2. When Boeing changed its system, what criteria might its managers have used to decide whether to invest in the new system?

3. Is changing to a system that provides more accurate product costs always a good strategy? Why or why not?

Requirement 1. Select the choice that states why Boeing most likely decided to change the system.

-----------------------------------------------------------------------------------------------------

A.

Boeing's competitive environment and manufacturing processes changed greatly in recent years. An accounting system that served them well in their old environment would not necessarily be optimal today. Boeing's management probably thought that changes in the accounting system were necessary to produce the kind of information necessary to remain competitive.

B.

Boeing was motivated to change their accounting system in order to keep up with technology. The employees coming straight out of college today are tech savvy and balked at having to use an outdated accounting system.

C.

As Boeing has made very few changes in their environment and manufacturing process, they were motivated to change their accounting system to give them an advantage above their competitors by providing data in a new format that will help them with a more up-to-date approach with marketing (all other areas will remain unchanged).