Bridgeton Industries: Automotive Component & Fabrication Plan

2068 WordsMar 16, 20139 Pages
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 the market dominated by U.S automobile manufactures. It became less effective when foreign competition and scarce, expensive gasoline caused domestic loss of market share. Throughout the 1980s, the ACF experienced serious cutbacks due to this…show more content…
Second, they would drop one product of manifold. When the product of manifold was not dropped, assume that the selling prices, volumes and material costs for the year 1991 model would not change for fuel tanks and doors. Therefore, the budget year of 1991was the report of 1990 and it was not changed for 1991 (see table 4). When manifold line was dropped, the situation of 1991 in comparation to 1990 was similar to the situation of 1988 in comparation to 1989. Assume that the change of the overhead per the change of labor cost of 1988 and 1989 was the situation of 1990 and 1991 and was not changed equal to 2.7 (see table 5). Assume that the direct labor cost of 1991 for the product dropped manifolds was the direct labor cost of that product in 1990 (see table 5). The total direct material of 1991 was $33,821 (see table 6), the direct labor was $7,562; the total overhead was $61,741 and the rate of overhead per direct labor was 816% (see table 5). (Question 6) It is clear that if they drop manifold the overhead per direct labor increases too many to 816% (see table 5) but the most important thing was that total gross income decrease too many from $63,501 in 1990 to $30,298 in 1991 (see table 6). The recommendation based on the model year budget of 1991 (see table 6) was that they should not outsource manifolds from the ACF in 1991 because it make the total gross income of the company dramatically decrease. A lot of other information should take

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