Bridgeton Case Questions

Bridgeton Case Questions - Bridgeton Industries: Automotive...

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Unformatted text preview: Bridgeton Industries: Automotive Component & Fabrication (ACF) Plant Case questions 1. Calculate the overhead allocation rate for each of the model years 1987 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have those changes occurred? 2. 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 profit margins as a percentage of selling price on each product based on the 1988 and the 1990 model year budgets. (Assume that the selling price and material and labor cost do not change from the standard.) 3. Are the product costs reported by the cost system appropriate for use in the strategic analysis? What cost information would you like to have? 4. 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, and material costs will not change. Prepare an estimated model year budget for the ACF in 1991: (1) If no additional products are dropped (2) If the manifold product is dropped. Explain any assumptions you make in preparing your estimated model year budgets. 5. Would you outsource manifolds from the ACF in 1991? Why or Why not? What additional information is needed to support your decision? ...
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