Seminar paper from the year 2002 in the subject Business economics - Business Management, Corporate Governance, grade: 1 (A), Manchester Metropolitan University Business School (Management Accounting), language: English, abstract: Please note that Exhibit II of my chosen case study, Bridgeton Industries, has a few mistakes in the sub totals and therefore also in the total factory profit. I have corrected these in Attachment I and will therefore proceed to assess this case using my attachment and not Exhibit II.
The aim of this writing is to evaluate whether or not manifolds should be outsourced and to identify the reasons for sustained unprofitably at the Bridgeton Industries automotive component and fabrication plant despite improvements in the effectiveness and efficiency of production processes.
To resolve this problem I will first look at current and future profitability of the individual product lines and then examine the method of overhead cost allocation and the way in which costs are captured. I will then create an estimated model year 1990/1991 in order to evaluate the effect that the outsourcing of manifold production will have on the remaining plant operations and therefore also upon overall plant profitability. To close I will make suggestions as to what could / should be changed in order to improve transparency for future decision-making.