Bridgeton Industries: Automotive Component & Fabrication Plant

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The Automotive Component & Fabrication Plant (ACF) was a long-term business supplier of components for the domestic automotive industry. However, ACF faced challenges in the 1980s, including decreased domestic market share due to foreign competition, expensive gasoline, and scarcity. This led to intense competition for production contracts, resulting in falling sales due to cost competitive pressure. ACF also had poor costing systems and lacked observations about market trends. To recover market share, ACF should improve product quality, decrease sell price, add new distributions, and increase advertising expenditure. Adequate market analysis research and observation should be done before building new plants to avoid unnecessary waste of resources. ACF should use activity-based costing to classify costs accurately and reliably and allocate overhead using budgeted overhead rates for better control of manufacturing activities. Using budgeted overhead rates might be more reasonable for production costing purposes to collect and report actual direct costs.

Table of Content


The Automotive Component & Fabrication Plant (ACF) was originally the main plant site for Bridgeton Industries and played a vital role as a supplier of components for the domestic automotive industry. ACF had been operating successfully since the early 1900s, benefiting from the dominance of U.S. automobile manufacturers in the market. In contrast to ACF, most competitors were either local suppliers or other plants owned by Bridgeton. However, during the 1980s, factors such as rising gasoline prices, competition from foreign companies, and scarcity led to significant cutbacks at ACF and a decrease in its market share within the country.

Problems and issues include:

ACF is currently facing a significant sales decline due to cost competition. This problem is influenced by several factors, including losing market share to foreign competitors, increasing gasoline prices, and scarcity issues. These factors have intensified the competition for production contracts. Moreover, ACF’s insufficient comprehension of market trends has resulted in business closures, layoffs in skilled trades, and the need to devalue machinery, equipment, and buildings. The inadequate costing systems at ACF contribute to its inability to effectively compete on cost.


To regain lost market share, ACF should modify the marketing variables which involve enhancing product quality, reducing selling price, expanding distribution channels, and increasing advertising expenditure. Prior to constructing new facilities, ACF should conduct sufficient market analysis, research, and observation to avoid wastage of human resources and materials (VC and FC).

ACF should utilize activity-based costing (ABC) to categorize costs for increased accuracy and dependability in explaining profits or losses. The allocation of overhead should employ budgeted overhead rates as it offers advantages in controlling manufacturing activities more effectively. Moreover, the use of budgeted overhead rates is more appropriate in production costing to gather and present actual direct costs.

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Bridgeton Industries: Automotive Component & Fabrication Plant. (2016, May 13). Retrieved from

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