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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“competitive position and potential‚” products which could become world-class‚ and products which have no hope of becoming world-class. a. Do you think the strategic analysis‚ as described in the case‚ achieved its objective? Explain. Answer: The strategic analysis‚ as described in the case did achieve its objective of identifying and classifying the products in terms of competitive position and potential. Although the data used for this analysis - specifically the overhead cost data‚ seems
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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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The Bridgeton case introduced a relatively simple costing system: DM‚ DL‚ and one pool of indirect‚ support‚ or overhead costs. The one and only "cost pool" containing all overhead (OH) costs was allocated on the basis of DL$. In this case‚ the direct costs seem to be largely variable (i.e.‚ they vary proportionally with production volume)‚ whereas some of the indirect costs are relatively variable and others are largely fixed. Case in point: Not all INDIRECT costs are necessarily FIXED. To figure
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Obviously‚ there was a significant reduction in direct labor within these two years when there was no obvious 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:
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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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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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TOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 CASE QUESTIONS Seligram‚ Inc.: Electronic Testing Operations 1. What caused the existing system at ETO to fail? 2. Calculate the reported cost of the five components listed in Exhibit 6 using: a. The existing system. b. The system proposed by the accounting manager. c. The system proposed by the consultant. 3. Which system is preferable? Why? 4. Would you recommend any changes to the system you prefer? Why? 5. Would you
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