Bridgeton Case Essay

976 Words May 15th, 2013 4 Pages
1. The objective of the strategic analysis was to identify which products were world-class in terms of “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 to be based on incorrect cost allocation method and might have led to wrong classification of the products. b. What are the potential
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Change in direct labor costs was 46.48% from 1998 to 1989 [(13537-25294)/25294]. The table below has answer and explanation for each overhead account: Overhead Account Number | YOY Change(1988 to 1989) | Fixed / Variable / Something Else | Explanation | 1000 | 28.62% | Something else | This account seems to be composed of partially fixed costs such as janitors and partial variable costs such as truck drivers | 1500 | 13.79% | Fixed | Not much change as compared to direct labor cost | 2000 | 46.47% | Variable | Change in linear proportion to direct labor | 3000 | 46.46% | Variable | Change in linear proportion to direct labor | 4000 | 17.19% | Fixed | Not much change as compared to direct labor cost | 5000 | 17.98% | Fixed | Not much change as compared to direct labor cost | 8000 | 37.03% | Fixed | Depreciation expense is fixed straight line | 9000 | 12.15% | Fixed | Not much change as compared to direct labor cost | 11000 | 37.14% | Fixed | These are one-time project related expenses for reconfiguration and are fixed | 12000 | 46.48% | Variable | Change in linear proportion to direct labor costs | 14000 | 17.98% | Fixed | Not much change as compared to direct labor cost |

4. In 1990, Bridgeton sold $93,120 worth of Manifolds. Assume that Bridgeton could purchase that same quantity of Manifolds for $65,000 if they outsource production. Do you think that Bridgeton should outsource

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