Bridgeton Industries 1. Describe the competitive environment for Bridgeton as well as the cost accounting system currently in use. When foreign competition and scarce‚ expensive gasoline began to play an important role in the market‚ Bridgeton began to lose domestic market share. The ACF Bridgeton plant faced new challenges in their production that led them to serious cutbacks like the closing of the ACF plant for manufacture of fuel-efficient diesel engines. By 1987‚ they classified
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Bridgeton Industries Automotive Component and Fabrication Plant The union has worked with us and has even led in cost reduction programs. Now corporate is talking about outsourcing additional products. What more can we do to keep the business? mike lewis‚ plant manager The Automotive Component and Fabrication Plant (ACF) was the original plant site for Bridgeton Industries‚ a major supplier of components for the domestic automotive industry. The history of the
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The automotive component & Fabrication Plant‚ ACF‚ was the original plant site for Bridgeton Industries‚ a major supplier of components for the domestic automotive industry. All of the ACF’s production was sold to the Big-Three domestic automobile manufactures. Its main competitors were local suppliers and other Bridgeton plants. This company did very well but recently it became less effective when foreign competition and scarce‚ expensive gasoline caused domestic loss of market share. For boost
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costs allocated on direct labor cost. However‚ in the total of overhead pool‚ not all are fixed‚ but there are some variable indirect costs. By using only one overhead pool does not reflect the actual indirect cost that caused by different classes. 5. Under scenario 1‚ no additional products will be dropped from 1990 to 1991. Therefore‚ the difference of change in overhead allocation rate from 1990 to 1991 will be very small‚ like from 1987 to 1988 when the product line remained the same. Assuming
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Bridgeton Case a) What is the competitive environment Bridgeton faces? What was Bridgeton’s response? Bridgeton is facing stiff competitive pressure due to a shrinking market demand. Bridgeton sells primarily to the big three domestic automakers and starting in 1985 the Automotive Component & Fabrication plant (ACF) started to feel the loss of domestic market share. Bridgeton’s management inaccurately anticipated a continued growth in the fuel-efficient diesel engines market in the mid-1970s
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Bridgeton Case Bridgeton Industries is faced with a difficult decision. Manifolds have been their most profitable product but based off of their recently developed classifications for products it has fallen to the lowest class. The lowest class is then designated to be outsourced. There are many implications for the decision to stop making manifolds. If they eliminate them they are losing almost half of their sales totals ($226‚542-$93‚120= $133‚422). This would then in turn drastically reduce
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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
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Bridgeton Industries: Automotive Component and Fabrication Plant By: Saurabh Saxena In 1985‚ Bridgeton Industries‚ a major supplier to Big-Three domestic automobile manufacturers‚ is facing a competitive environment with advent of foreign competition and rising gasoline prices‚ leading to shrinking pool of production contracts. Bridgeton reacts by closing ACF diesel engine plant and hiring strategic consulting firm to classify their products on competitive
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change in overhead costs. According to the case‚ the decision to outsource Muffler-exhaust systems and oil pans was based on the model without overhead allocation. Overlooking the overhead allocation represented a nightmare in analysis and led Bridgeton face falling profits. To further explore the problems‚ we allocate overhead costs into each products for getting the true profits and the ROS: Profit By Segment 1987 1988 1989 1990 Fuel Tanks 32‚849 36‚767 33‚703 35‚956 Manifolds
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Bridgeton Industries: Automotive Component & Fabrication Plant The Automotive Component and Fabrication Plant (ACF) was the original plant site for Bridgeton Industries‚ a major supplier of components for the domestic automotive industry. It manufactured fuel tanks‚ manifolds‚ doors‚ muffler/exhausts and oil pans. All its products were sold to Big Three domestic automobile manufactures. Competition was from local suppliers and other Bridgeton plants. The plant well grew and developed as far as
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