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Essay / Research Paper Abstract
A 7 page paper discussing the state of business for this manufacturer of cast iron wood-burning stoves. Seven specific questions address management accounting and strategy issues to conclude that Bridgewater should not presently drop one of its two products, but rather seek out methods of making the under-performing product more profitable. The paper suggests that it develop innovations presently not offered by competitors to be able to profit from first-mover advantage as it now enjoys with the product it plans to retain. Otherwise it will be facing the same situation when competitors begin offering similar products. Bibliography lists 1 source.
Page Count:
7 pages (~225 words per page)
File: CC6_KSacctBridge.rtf
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Unformatted sample text from the term paper:
Bridgewater Castings manufactures two models of wood-burning cast iron stoves. One is a standard model; the other has an added baking oven included. Declining sales and high
costs associated with the standard model has led the company to assess the value of continuing to produce the standard model. 1.a. 1983 Income Statement and Balance Sheet (asset side
only) Item Value Notes Sales 9,000,000 CGS 5,100,000 $170/unit x 30,000 units Gross Margin 3,900,000 sales - CGS Selling Cost 1,950,000 $65 each unit; 30000 units Shipping Cost
1,560,000 $52 each unit; 30000 units Sales Commissions 5% 450,000 $15 each unit General Expenses 500,000 p. 50: 1/2 million for several years. This is 1983; Exhibit 1 is
1985 Profit Before Taxes 294,000 p. 50: 20,000 oven models in 1985; 25k stoves = $245k total profit = $9.80 net profit each Current Assets
Working Capital 2,250,000 Long Term Assets Manuf Facilities 0 space is rented Total Assets 2,250,000
1.b. Estimated ROA 1983: 30,000 Stoves ROA = net income ? total assets ROA = 294,000 ? 2,250,000 ROA = 0.13066 2. Estimate of ovens
profit and stove profit in 1985 Considering only manufacturing, selling and shipping costs, the apparent portion of unit costs attributable to only these
items is shown in the following table: Cost Item Each Oven Each Stove Manufacturing 180 170 Selling 75 65 Shipping 60 52 Total 315 287 Less sales price
350 300 Unit profit 35 13 Profit is considered here only in terms
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