Essay on Bridgeton Industries

803 Words4 Pages
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 its selling, it made four criteria, quality, customer service, technical capability, and competitive cost position to evaluate three classifications of products. Question 1 According to Exhibit 2, Model Year Budgets for the ACF, we can know the…show more content…
Therefore, we can guess why direct labor costs and material costs went down faster than overhead. Question 3 | Production 1 | Production 2 | | 1988 | 1989 | 1988 | 1989 | Expected selling price | 62 | 62 | 54 | 54 | Standard material cost | 16 | 16 | 27 | 27 | Standard labor cost | 6 | 6 | 3 | 3 | Overhead allocation rate(OAR) | 434% | 577% | 434% | 577% | Overhead(OAR*DLC) | 26.04 | 34.62 | 13.02 | 17.31 | Gross margin per unit | 13.96 | 5.38 | 10.98 | 6.69 | Gross margin/Sales | 22.5% | 8.7% | 20.3% | 12.4% | Question 4 In my opinion, the four criteria, quality, customer service, technical capability, and competitive cost position, are very appropriate to classify its products because this company considered most all of aspect of products to catalog and classify and this way can help this company to find out which type product should use which method to reduce its costs. Question 5 Model 1: the criterion is no additional products are dropped. So, we can assume no additional products will be dropped in 1991 from 1990. The change in overhead allocation rate from 1990 to 1991 will be similar to the change from 1987 to 1988. The differences in 1987 to 1988 are fairly not important. If we assume that change in overhead from 1990 to 1991 will also be omitted because the product line has not changed; therefore, the 1991 overhead allocation rate will be the same as the 1990 overhead allocation rate of 563%. Model 2: the

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