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 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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the problems can be viewed from the inappropriate model for the strategic analysis. To understand the root cause of problems‚ we calculate the overhead allocation rate for each of the model years from 1988 through 1990: 1987 1988 1989 1990 OH Rate 435% 435% 575% 565% It can be seen from the table that‚ after outsource of Muffler-exhaust systems and oil pans‚ the overhead rate was dramatic increase from 435 % in 1988 to 575% in1989. The overhead costs went from 109‚890 in 1988 to 78‚157
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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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any changes to the system you prefer? Why? 5. Would you treat the new machine as a separate cost center or as a part of the main test room? Bridgeton Industries: Automotive Component & Fabrication Plant 1. The official overhead allocation rate used in the 1987 model year strategy study at the Automotive Component and Fabrication Plant (ACF) was 435% of direct labor cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate
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* Better utilization of available resources and capability by freeing up internal resources that could be put in to effective use for other purposes * Outsourcing also enables companies to realize the benefits of re-engineering. 2. Bridgeton has already outsourced muffler-exhaust systems and oil pans. c. How much overhead cost would have been saved by outsourcing of muffler-exhaust systems and oil pans if i. Overhead costs were entirely fixed costs (regardless of the
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Vanessa ACCT 606 CASE 2 2/8/2011 1. I use: overhead for period / allocation base for period (in this case-DL)=Overhead Allocation Rate In 1987‚ OH$107‚954/DL$24‚682=437% 2. The changes from 1987 to 1988 were not significant. However‚ the changes in overhead allocation rates in 1989 and 1990 appeared to be significant when compared to 1987 rates. Because in 1988 and 1989‚ total overhead costs decreased about 25%‚ but direct labor costs‚ direct material costs in decreased even more
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outsourcing. 1.1 Introduction Outsourcing is contracting with a different company or individual to do a specific capacity. Practically each company outsourcers somehow. Normally‚ the capacity being outsources is acknowledged not determined to the business. A protection company‚ for instance‚ may outsource its protection and arranging operations to firms that work in these sorts of work seeing that they are not identified with protection or strategic to the business. The outside firms that are furnishing
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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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