G. G. Toys and games Case Study
February twenty eight, 2012
The five most important issues G. G. playthings is facing are the fall in pre-tax margins with the Geoffrey toy, the costing system being used in the Chicago plant, how to efficiently use the excess materials and machines used to make the reindeer doll for 3 months, whether or not to produce the " Romaine PatchвЂќ toy and the last being what caused a rise in sales in the Chicago grow in 03 2000 inspite of a decline in production.
The 1st issue is a continuously suffering pre-tax margins of the Geoffrey doll. This kind of margin features dropped from 25% to 10%. This being one among their well-known dolls needs the company to consider changing their current production plan towards plaything that are producing a higher perimeter.
The second reason is the being system getting used in the Chicago grow. G. G. Toys should change its existing cost accounting program from classic costing to activity-based being because it is establishing its manufacturing overhead in only one price, direct time. Since overhead at the Chicago plant can be high, the cost accounting system must be exact. Different types of dolls require diverse amounts of machine hours and other variable costs. By using Activity-based costing, every single doll may have a different making overhead allocated to it. This could sort creation into classes giving every a unique contribution margin.
The third concern to discuss can be how to efficiently use the products purchased to get the production in the reindeer doll. During the months the reindeer doll is usually produced leaves the space lying idle coming from October to June. I believe that producing only the reindeer doll will never be efficient. This doll does not use the machinery just bought for a great efficiently. I believe if the firm produced more toys and considered building a holiday range it would convince bring them in more profits. Making more plaything for different situations using the same machinery and...