G.G. TOYS Harvard Case Solution & Analysis

G.G. Toys Case Study Help

Geoffrey doll product was G.G. Toys’ most popular and standard doll product. If G.G. Toys’ adopts this new system, the company will be able to increase its standard product’s profit margins up to 27% along with decreasing its production cost. Under new accounting system, the profit margin for Geoffrey doll has been increased because previously, the management allocated the overhead cost on the basis of total labor used regardless of production runs. Geoffrey dolls requires less production runs, setups and related machine hours. Thus, its profit margin yielding increased returns. Additionally, as the intense competition and retailers’ demand promoted G.G. Toys to provide customize production, the number of sales of Specialty-Branded doll has been drasticallyincreased. Thus, the management could generate more revenues with the help of this increased sales of Specialty-Branded doll in despite of its low profit margins of 3%. However, the increased sale will eventuallydivided the overhead cost into all units produced and will helped to increase the overall profit margin.

Table 4

Question: 4

In March 2000, G.G. Toys decided to manufacture the Reindeer dolls for the months of July to September in Chicago plant.Additionally, the management expanded its production capacity for Reindeer dolls’ production along with purchasing more machines and leased space. The product doll will increase the doll’s product line, this new product will require the use of more labor and machine hours and will be resulted in increased overall overhead cost. But this increased cost will be divided among the total unit produced and will help to lower down each product’s cost eventually. This expanded production will yield more unit production and will help the organization to earn more revenues. The overall cost of Geoffrey doll and Specialty-Branded doll will be lowered down because of low overhead cost. Additionally, during the months of October to June, this expanded production capacity will be utilized well for the production of the Romaine patch doll and will help to reduce the fixed cost. To save the cost generated form the Springfield plant, it is recommended that the company should close this plant and start the cradles’ production in the Chicago plant.

Question: 5

Difference Between Forecasted and Actual Revenue

The actual revenues are the revenues which has been actually earned by the company while the forecasted revenues are those revenues which has been expected by the company to be earned by the end of the year. The forecasted revenueshave been made upon some specific facts and figures such as past revenues’ trends and the economic demand changing conditions.

In March 2000, the Chicago Plant’s revenues had shown an increased amount as compared to its forecasted revenues. G.G. Toys’ forecasted a revenue of $765,000 along with the production of 24,900 forecasted units(R Rodgers, P Joyce, 1996). It could be seen in the G.G. Toys’ 2000 income statement that the G.G. Toys’ earned an increased revenue. But the production units had been decreased by 900 units. The management is worried about this production unit decrease. A detailed variance analysis has been performed in order to determine the fluctuations yielded because of this decrease. The analysis represents that the increased price variance could offset the decreased quantity variance and yielded the increased revenues.

Table 5

Question: 6

The Romaine patch doll

In March 2000, G.G. Toys decided to produce the Romaine patch doll in Chicago plant. It is recommended that G.G. Toys should produce Romaine patch doll because of will be labor centric and will not require new productions runs and setups. Additionally, this product will be handmade and requires soft clothes’ material. Its price has been set up to $8 per unit along with the a per unit material cost of $6 and the labor cost of $3. This could be seen that this forecasted estimate will yield negative profit margin. But, G.G. Toys should consider other aspects too. G.G. Toys’ management estimated that the current production yields 20% of scrap material of pajamas material and this material could be used in the production of the Romaine patch doll. This is concluded that the material price will become $0 for the Romaine patch doll production because of the scarp material. Additionally, this will help the company to earn up to 63% of profit margin.Additionally, the management expanded its production capacity for Reindeer dolls, this expanded production capacity will be utilized well from October to June in future.

Table 6

Conclusion

G.G. Toys was a top high-quality manufacturer and supplier of dolls in U.S. G.G. Toys operated under two manufacturing plants- The Chicago Plant and The Springfield plant. Various types of dolls were produced in Chicago Plant, whereas the other plant was used to assemble these dolls cradles. The production cost of Geoffrey doll product was increased and a rapid decline in the Geoffrey doll product was seemed. To cope up with this, the G.G. Toys recommended change its cost accounting procedure because its standards product’s production cost has been increased due to this system. ABC cost accounting is an effective system which will allocate only the respective product’s cost to each product based upon the machine and labor hours being used....................

This is just a sample partical work. Please place the order on the website to get your own originally done case solution

Related Case Solutions & Analyses:

Is It Time to Rethink Your Pricing Strategy P.V. Technologies Inc.: Were They Asleep at the Switch Spreadsheet Supplement The Auction for Travelport (B) Differences at Work: Erica (A) Good Technology: Empowering Mobility Around the Globe (B) Introduction to Interest Rate Options Avon.com (A) Banana (A) Siemen AG: Global Development Strategy Cola Wars Continue: Pepsi and Coke