Premium Essay

Bridgeton Case

In: Business and Management

Submitted By dingyi1983
Words 486
Pages 2
1. Provide your best estimate of the cost and profitability of Wilkerson’s three product lines using:
a. Wilkerson’s existing cost system
b. an activity-based cost model using the information in the case
2. What causes any shifts in reported product costs and profitability?
3. Based on your analysis in Question 1b, recommend three distinct actions that Wilkerson’s managers could implement to improve profitability?
4. What concerns, if any, do any have with the cost estimates you prepared in the answer to Question 1b?

PREPARE:
Case study Komandor. Prepare the following questions for class discussion:
1. Consider each of the following alternatives:
a. Capitalize the consulting fees; in other words, following the practice preferred by the Polish authorities.
b. Allocate the consulting fees to the plastic products bought by
Komandor.
c. Allocate the consulting fees to the metal products bought by
Komandor.
d. Hire a tax official as a “consultant” to ensure that Komandor receives a clean tax audit.
e. Don’t invoice Poland for the consulting fee; just deduct the expense in Canada.
For each option, estimate the expected cash flow consequences relative to the desired (prohibited) alternative of deducting the full $200,000 cost in
Poland. Also, identify the advantages and disadvantages of each approach.
2. In light of your answers in Question 1, which alternative should Komandor adopt, and why?

Case: Barrows Consumer Products (Written assignment) PREPARE:
Case study Barrow Consumer Products. Prepare AND SUBMIT the following questions: 1. What are some of the factors causing the problems in measuring performance in the Southeast Asia Sector?
2. Rank the three countries using each of the following measures of performance: a. Operating income
b. Return of investment
c. Residual income (with no…...

Similar Documents

Free Essay

Bridgeton Case

...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 plant dated back to the 1840s when the adjoining river attracted mills that processed the rich lumber resources in the area. The site progressed through several industrial uses, including an early wagon works, until it was finally purchased by the founder of Bridgeton. He opened his first office there in the early 1900s. All of ACF's production was sold to the Big Three domestic manufacturers. Competition was primarily from local suppliers and other Bridgeton plants. As long as the market was growing and dominated by U.S. manufacturers, this strategy worked. It became less effective when foreign competition and scarce, expensive gasoline caused domestic loss of market share. Suppliers found themselves competing for a shrinking pool of production contracts. Throughout the 1980s, ACF experienced serious cutbacks due to this competitive pressure. However, as the 1989/90 model year budget approached, ACF was still considered a critical plant. Model years ran from September 1 to......

Words: 2151 - Pages: 9

Premium Essay

Case

...Bridgeton Assignment 1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products in the same product line: Product 1 Product 2 Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price and material and labor cost do not change from standard. 4. Are the product costs reported by the cost system appropriate for use in the strategic analysis? 5. Assume that the selling prices, volumes, and material costs for the 1991 model year will not change for fuel tanks and doors produced by the ACF of Bridgeton Industries. Assume also that if manifolds are produced, their selling prices, volume, and material costs will not change either. a. Prepare an estimated model year budget for the ACF in 1991 (1) if no additional products are dropped. (2) if the manifold product line is dropped. Explain any additional assumptions you make in......

Words: 284 - Pages: 2

Premium Essay

Case

...DESCRIPTION: As a historied plant that was developed by several industry uses, ACF ultimately become an original plant site of Bridgeton Industries. The whole production of ACF was sold to the Big-Three automobile manufacturers, major competitors were the local&foreign suppliers and intracompany plants. Production processes of six major products (as fuel tanks, manifolds, etc.) were diverse from each other. ACF was using the relatively old cost system of ‘one plant-wide overhead pool’, in which the overhead was allocated on Direct Labor base. PROBLEMS AND ISSUES: Due to the competition (e.g. foreign competition) in all lines grows fiercely, the competitive environment was getting tough for ACF. It led to a series of cutbacks, layoffs and etc. In 1987, ACF consulted a firm on classifying their products in three classes with four criteria. This resulted in the ACF outsourced the Class III products. Though the act aimed to a better products performance, refer to Exhibit 2, the overhead rate increased from 437% to 563% during 1987-1990, in particular after 1988(model year of outsourcing). Unlike labor cost, certain fixed costs associated with the outsourced products still remain, these led to an increase of overhead allocation rate on the products in hand. Despite of the measures in improvement (like increase uptime to narrow the gap with the world-class Japanese), Manifolds ultimately downgraded from Class II to III and thereby candidates to be outsourced. The facing......

Words: 496 - Pages: 2

Premium Essay

Bridgeton Industries: Automotive Component & Fabrication Plant (Acf)

...Bridgeton Industries: Automotive Component & Fabrication Plant (ACF) Description The ACF was a major supplier of components for the domestic automotive industry as all of its production was sold to the Big-Three domestic automotive manufacturers. The ACF gone through different industrial uses until the founder of Bridgeton purchased it and it became the original plant site for Bridgeton Industries in the early 1900s. The ACF faced the competition from local suppliers and other Bridgeton plants. As market demand and supply are changing all the time; throughout the 1980s, the ACF experienced severe cut down due to the loss of domestic market share and competitive pressure. Problems and Issues The problem of the ACF is that even the sales were increased, the profit still falling down after several strategic steps are taken. In 1985, one of the engine plants shut down and other operations of the ACF are hanging by thread. In the 1987 model year, the overhead rate was 435% of direct labour dollar cost. There are several cost issues that hide in above status quo. The issues that cause this problem are presented as following. The plants were planned and built to manufacture of fuel-efficient diesel engines that were consistent with a continued growth demand in the market. However, in 1985, the oil crunch and not sustained demand for diesel-powered car threatened the development of the plants. This was an incorrect anticipant decision. Furthermore, special studies......

Words: 411 - Pages: 2

Premium Essay

Bridgeton Industries

...Bridgeton Industries: Automotive Component & Fabrication Plant Answer 1: The primary competitions for Automotive Component & Fabrication Plant (ACF) of Bridgeton Industries were local suppliers and other Bridgeton plants. The ACF sold all of its production to the Big-Three domestic automobile manufacturers. As the US automobile market was growing and was dominated by the domestic automakers, the ACF experienced a period of healthy profitability. However, in the 1980s the competitive environment began to change. The domestic automobile manufacturers were challenged by foreign competition. In addition, scarce and expensive gasoline caused a decline in the domestic market share resulting in shrinking of the production contracts. The ACF felt the heat of this competitive pressure and experienced serious cutbacks. It even had to shut down a plant that manufactured fuel-efficient diesel engines in the model year 1986. All related production jobs were eliminated and skilled trade positions were reduced where possible. The cost accounting system currently in place at Bridgeton uses a mix of job and process costing. In order to allocate indirect costs, one cost pool (single overhead pool) system is used in which the overhead (burden) is applied to products as a percent of direct labor dollar cost. Answer 2: The overhead (burden) was allocated to the products at ACF as a percent of direct labor dollar costs. The overhead percentage was calculated at budget time and......

Words: 354 - Pages: 2

Free Essay

Case

...case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case case......

Words: 3640 - Pages: 15

Premium Essay

Case Study

...techniques of cost allocation. 3. To understand the relationship between cost and volume and application of this in making different decisions. 4. To develop ability to make different decisions by using accounting information. 5. To understand the application of budgeting and standard costing as controlling tool. 6. To apply the different tools of management accounting for performance appraisal. To achieve these objectives, teaching focus will be on conveying the specific concepts and develops analysis capabilities without losing the general management perspective. COURSE MATERIALS: The course packet is ready for you to purchase at the Resource Center. IT IS ESSENTIAL FOR EVERYONE TO PURCHASE THE COURSE PACKET. This packet contains case-materials (Prescribed book is available in market, you can purchase it). Required readings should be done before the class for which they are assigned. PRESCRIBED TEXTBOOK: 1. Cost Accounting by Horengren 14th Edition REFFRENCE TEXTBOOKS: 2. Cost Accounting by Matz and Usery 7th Edition 3. Management and Cost Accounting by Collin Drury, 7th Edition Most of these books are available at GIFT University Library. PREREQUISITES: ACC-512: Cost Accounting must be cleared. GRADING & EVALUATION: Your final grade in the course will be computed using the following weights: Assessment Individual/Group Percent Class Participation &......

Words: 921 - Pages: 4

Premium Essay

Case

...Join now! Login Support Other Term Papers and Free Essays Browse Papers Business / Timbuk2 Case Study Timbuk2 Case Study Term Papers Timbuk2 Case Study and over other 20 000+ free term papers, essays and research papers examples are available on the website! Autor: santhanam.vikram 09 December 2013 Tags: Words: 723 | Pages: 3 Views: 86 Read Full Essay Join Now! CASE STUDY: TIMBUK2 1.) Consider the two categories of products that Timbuk2 makes and sells. For the custom messenger bag, what are the key competitive dimensions that are driving sales? Are their competitive priorities different for the new laptop bags sourced in China? Some of the competitive advantage which are the key factors of Timbuk2 bags are:-  Quality  Durable  Reliable  Not prone to defects  Custom made bags for each of the customers  The quick delivery of bags  The rave review which the company gets for its bags i.e. it basically carries a good name in the market  For its laptop bags, even though they are manufactured in china, the designing is done in San Francisco. so the exclusivity remains  Cost effective manufacture of laptop bags in china  Being able to adopt to changes in demand and fashion By manufacturing the bags in china the company saved the manufacturing cost but lost their niche of manufacturing and selling in America itself. The general perception of it being a Chinese product led to customers felling......

Words: 564 - Pages: 3

Premium Essay

Case

.../InstructorResourceManual.pdf‎ The case was prepared by Mark S. Beasley, Ph.D. and Frank A. Buckless, Ph.D. of North Carolina State University and .... Case 1.1: Ocean Manufacturing, Inc. Ocean Manufacutring Inc The New Client Acceptance ... www.studymode.com/.../ocean-manufacutring-inc-the-new-client-accept...‎ Ocean Manufacturing, Inc.: the New Client Acceptance Decision: Case 1.1 Ocean ... Problem Solution: Harrison-Keyes Inc. Ayodeji Ajayi University of Phoenix ... Ocean Manufacturing, Inc.: The New Client Acceptance ... www.freecasestudysolutions.com/case-study-Ocean-Manufacturing-Inc-...‎ Case 1.1 Ocean Manufacturing, Inc.: The New Client Acceptance Decision Ocean Manufacturing, Inc. is recommended as a ... ORDER NEW SOLUTIONS ... Solution Manual for Auditing Cases An Interactive Learning ... testbanksfor.com › All test banks and solution manuals‎ Download Solution Manual for Auditing Cases An Interactive Learning Approach 5th Edition by Beasely. Solution Of Ocean Manufacturing Inc Free Essays 1 - 30 www.papercamp.com/group/solution-of-ocean-manufacturing.../page-0‎ Free Essays on Solution Of Ocean Manufacturing Inc for students. ... ACCT 805AE Case 4 Ocean Manufacturing, Inc The Osprey Group Feb 21, ... Auditing: r c aSe S t h at diSc uSS topicS rel ated to thiS Section 1.1 Ocean Manufacturing, Inc. . Case 1 1 Ocean Manufacturing Inc Free Essays 1 - 30 www.papercamp.com/group/case-1-1-ocean-manufacturing-inc/page-0‎ Case 1.1 Ocean Manufacturing, Inc.:......

Words: 447 - Pages: 2

Premium Essay

Case to Case

...CASE STUDY 2 I. THE ARALIN TEACHER Mrs. Boots De Vola was assigned to teach the first section in third year level. She assumed that she is an effective and efficient teacher in Araling Panlipunan because of that. There are many teachers qualified and much deserving to teach the star section. Now, the students are complaining of the expenses regarding projects, special projects and the way she behave in classroom. II. HISTORY AND BACKGROUND OF THE FACTS Mrs. Boots De Vola have underwent the process of being LSB teacher, PSB teacher, before she was declared as regular teacher in Banana National High School. It has been five years that she handled Aralin in section one. There are congruency on each year complaint but since the students are afraid of failing her subject they remained quiet. I seldom hear news about her projects and the money she collected from her advisory class. Every single mistake has an specified amount to be collected as fine, but the students don’t know where these money will be spent. Another concern about Mrs. Boots De Vola is the way she handled and treated her students. She always nag and shout to students, for her it’s the way of disciplining her students. Some of the students chose to dropped schooling because they felt being degraded and they do not have money for everyday fine. Lately, a mother asked her about the special project of her son amounting one hundred thirty pesos. The project was properly discussed, but we found out that......

Words: 699 - Pages: 3

Premium Essay

Bridgeton Industries

...Case Summary Foreign competition and the oil crisis experienced in the 1970s has caused cutbacks in the automotive parts and manufacturing industry and pressure to meet stricter emissions standards. Maintaining costs and profit margins has become more difficult amid a climate of outsourcing and discontinuations. #2 Overhead Rate The difference in overhead allocation has occurred due to the outsourcing of muffler/exhausts and oil pans. Since there are fewer products to absorb fixed costs the overhead allocation rate increases rather dramatically. 1988 1989 1990 [Total OH/DL] x 100 109,890/25,294 78157/13537 79393/14102 Rate 434% 577% 563% #3 Gross Margin % Product 1 1988 1989 Price $ 62.00 $ 62.00 Material Cost $ 16.00 $ 16.00 Labor Cost $ 6.00 $ 6.00 Overhead Cost $ 26.04 $ 34.62 Profit $ 13.96 $ 5.38 Gross Margin 23% 9% Product 2 Price $ 54.00 $ 54.00 Material Cost $ 27.00 $ 27.00 Labor Cost $ 3.00 $ 3.00 Overhead Cost $ 13.02 $ 17.31 Profit $ 10.98 $ 6.69 Gross Margin 20% 12% #4 Appropriate Nature of Costs Machine hours may be a better allocation base as the plants are highly mechanized. #5 Manifolds Projection % of Total with Manifolds w/o Manifolds 1987 1988 1989 1990 1991 1991 Sales Fuel Tanks $ 70,278 21% $ 75,196 $ 79,816 $ 83,535 $ 87,223 $ 87,223 Manifolds $ ......

Words: 688 - Pages: 3

Premium Essay

Case Summary

...Bridgeton Industries: Automotive Component & Fabrication Plant In the early 1900s, the Automotive Component & Fabrication Plant (ACF) was the primary production site for Bridgeton Industries. All of the ACF’s products was provided to the Big-Three domestic automobile producers. At that time, the competitors were only domestic suppliers and other Bridgeton plants. However, later on, competition became stronger due to the foreign suppliers increased. In addition, the expensive gasoline and scarce caused the ACF loss their market share. At the end of 1986, engine plant—one of the ACF plant had to shut down due to the unsustain growth in diesel-powered cars. The physical machinery, equipment and building were written down and taken off the plant books. In 1987, Bridgeton Industries employed a strategic consulting company. On the one hand, the Strategic consulting company needed to examine Fuel Tanks, Manifolds, Front and Rear Doors, Muffler-Exhaust System and Oil Pans. On the other hand, the strategic consulting company was also asked to classify all the five kinds of products in term of “world -class” competitive position and potential. After collecting data and doing interview, the consultants put the products in the following classification: Class 1: Fuel tanks (having costs equal to or lower than competitors’ costs) Class 2: Manifolds, Front and rear doors (having costs 5%~15% higher than competitors’ costs) Class 3: Muffler-exhaust systems and oil pans......

Words: 586 - Pages: 3

Premium Essay

Accounting Case

...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 the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products in the same product line: Product 1 Product 2 Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price remains constant and material/labor costs do not change from standard. 4. Are the product costs reported by the cost system appropriate for use in the strategic analysis? 5. Assume that the selling prices, volumes, and material costs for the 1991 model year will not change for fuel tanks and doors produced by the ACF of Bridgeton Industries. Assume also that if manifolds are produced, their selling prices, volume, and material costs will not......

Words: 1915 - Pages: 8

Premium Essay

Case Case

...Case Analysis - FPL Energy FPL Energy is one of the nation’s leading independent generators of electricity. Dedicated to generating clean energy, 80 % of its capacity is fueled by clean and renewable resources. The United States is the nation with the largest generator of wind energy, and it operates the two largest solar fields in the world. FPL Group, with annual revenues of more than $8 billion, is one of the nation's largest providers of electricity-related services. Its principal subsidiary, Florida Power & Light Company, serves approximately 3.9 million customer accounts in Florida. FPL Energy, LLC, and FPL Group energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. 2. Historical Overview FPL Group is a far different company today than the one Jim Broadhead joined in January of 1989 when he became president and chief executive officer. FPL Group was then engaged in a number of businesses unrelated to its core electric skills, including insurance and financial services, real estate, cable television, and agriculture. The company's principal subsidiary, Florida Power and Light, was considered a well-managed utility with an emphasis on quality. However, the utility's spiraling costs had resulted in electric rates among the highest in the Southeast. Today, FPL Group is nationally known as a high quality, efficient, and customer-driven organization focused on energy-related products and services. With a......

Words: 3471 - Pages: 14

Premium Essay

Bridgeton Cost Allocation

...drivers for the desktop delivery service. Midwest charged a price premium (up to an additional 5% markup) for the convenience and savings such direct delivery orders provided to customers. The company believed that the desktop delivery option would improve margins and create more loyal customers in its highly competitive office supplies distribution business. Midwest had introduced electronic data interchange (EDI) in 1999, and a new internet site in 2000, which allowed customer orders to arrive automatically so that clerks would not have to enter data ________________________________________________________________________________________________________________ Professor Robert S. Kaplan prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2004 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. Purchased by James Rinier (jrinier22@hotmail.com) on April 03,......

Words: 1694 - Pages: 7