Bridgeton Industries Cost Analysis
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Course: 45-701
Submitted to:
Prof. Zhaoyang Gu
Submitted by:
Neha Arya
Marc Brands
Anil Konjalwar
Alok Satyawadi
Competitive Environment
The ACF plant has experienced serious cutbacks throughout the 80s due to competitive pressure caused primarily by the entrance of foreign competition in a market formerly dominated by US auto manufacturers and the oil shock of the 70s. The expensive gasoline has started a trend in the auto industry for fuel efficiency resulting in ever increasing emission standards.
With the resulting loss of domestic market share, ACF is facing intense competition from not only other suppliers but other Bridgeton plants as well. The task of remaining cost competitive is daunting as outsourcing seems to be catching on as a way to cut costs.
Overhead Burden Rate
We have used direct labor as the allocation base to calculate the figures given below. However machine hours may be a better allocation base as the plants are highly mechanized.
|From Budgets |1988 |1989 |1990 |
|[Total Overhead/Direct Labor] x 100 |109,890/25,294 |78157/13537 |79393/14102 |
| Rate |434% |577% |563% |
Gross Margin %
|Product 1 |1988 |1989 |
|Price | $ 62.00 | $ 62.00 |
|Material Cost | $ 16.00 | $ 16.00 |
|Labor Cost | $ 6.00 | $ 6.00 |
|Overhead Cost | $ 26.04 | $ 34.62 |
|Profit | $ 13.96 | $ 5.38 |
|Gross Margin |23% |9% |
|Product 2 | | |
|Price | $ 54.00 | $ 54.00 |
|Material Cost | $ 27.00 | $ 27.00 |
Course: 45-701
Submitted to:
Prof. Zhaoyang Gu
Submitted by:
Neha Arya
Marc Brands
Anil Konjalwar
Alok Satyawadi
Competitive Environment
The ACF plant has experienced serious cutbacks throughout the 80s due to competitive pressure caused primarily by the entrance of foreign competition in a market formerly dominated by US auto manufacturers and the oil shock of the 70s. The expensive gasoline has started a trend in the auto industry for fuel efficiency resulting in ever increasing emission standards.
With the resulting loss of domestic market share, ACF is facing intense competition from not only other suppliers but other Bridgeton plants as well. The task of remaining cost competitive is daunting as outsourcing seems to be catching on as a way to cut costs.
Overhead Burden Rate
We have used direct labor as the allocation base to calculate the figures given below. However machine hours may be a better allocation base as the plants are highly mechanized.
|From Budgets |1988 |1989 |1990 |
|[Total Overhead/Direct Labor] x 100 |109,890/25,294 |78157/13537 |79393/14102 |
| Rate |434% |577% |563% |
Gross Margin %
|Product 1 |1988 |1989 |
|Price | $ 62.00 | $ 62.00 |
|Material Cost | $ 16.00 | $ 16.00 |
|Labor Cost | $ 6.00 | $ 6.00 |
|Overhead Cost | $ 26.04 | $ 34.62 |
|Profit | $ 13.96 | $ 5.38 |
|Gross Margin |23% |9% |
|Product 2 | | |
|Price | $ 54.00 | $ 54.00 |
|Material Cost | $ 27.00 | $ 27.00 |