Creative Toys Case

In: Business and Management

Submitted By yns025
Words 417
Pages 2
Creative Toys Inc.

1. If Inventory were to be written down in the 4th quarter instead of the 2nd quarter, it could cause the company to be compromised. One of the reasons that the allowance occurs in the 2nd quarter is because Browne realizes that it will make expenses appear too high, but, it will reduce the impact of the lack of future sales. However, if inventory were established in the 4th quarter, where they are expected to increase quite a bit, the transition would be easier. This is the reasoning behind Gurchick’s insistence of waiting for the 4th quarter. On the down side, if sales do not increase as expected, the company would be in substantial trouble. They will have a great deal of over stated income, which will be caught by auditors. They will make adjusting journal entries for this, which will decrease net income. If this decrease is too substantial then the books will be in the negative. Browne understands that the Chatter Chick was over produced, and is prepared to deal with the consequence. Gurchick prefers to take a gamble and hope for the best.
2. The corporate culture at Creative Toys is probably quite tense at this point. With Browne and Gurchick disagreeing over the course of action, the employees at this point are most likely wondering what the outcome of the decrease in demand will be and whether the company will be able to make it through this. I think that everyone is probably quite worried and tense at this point, and things are likely going to continue to be this way until the Chatter Chick fiasco is over and done with.

3. As the controller and chief accounting officer, Browne could request control over the books, without interference from the board. However, there is also an issue of conflicts of interest. If I was Browne I would be evaluating my values and beliefs. There are a lot of issues going on here that would make me…...

Similar Documents

Jot Toy Case

...2013 CASE STUDY www.cimaglobal.com/globalbusinesschallenge Jot – toy case study The date of the case is set at 1 November 2012 Industry background There is a large number of companies of various sizes which design and sell toys to retailers globally. Most toy companies outsource the manufacture of their toys and currently 86% of the world’s toys are manufactured in China. Most of the rest of the world’s toys are manufactured in other Asian countries, with only low volumes of products manufactured in Europe and the USA. The toy market is divided up into a variety of sectors, by children’s age range and the type of toy. There are different sectors with toys aimed for babies under one year old; children aged 1 to 3 years and pre-school children of 3 to 5 years. There is a further sector for children of school age of 5 years and upwards. Additionally the toy market is broken down into categories of toys. Research has shown that children aged 2 to 4 years old receive the most toys in quantity but that the most money is spent on toys for the 6 to 8 year age group. Toys sold in the market to those children aged between 9 and 11 tend to be more sophisticated. Some of these games need access to the Internet and most involve more complex programming. The other feature of this age group is that the ‘buyer’ tends to switch to the child from the parent. That is not to say that the child pays the money, more that the child drives the buying decision, always subject to the budget......

Words: 6861 - Pages: 28

Jot Toy Case

...candidate in exam conditions. It is more detailed for teaching purposes.  T4- Part B – Case Study Jot – toy case – March 2012 REPORT To: Jon Grun, Managing Director, Jot From: Management Accountant Date: 28 February 2012 Review of issues facing Jot Contents 1.0 Introduction 2.0 Terms of reference 3.0 Prioritisation of the issues facing Jot 4.0 Discussion of the issues facing Jot 5.0 Ethical issues and recommendations on ethical issues 6.0 Recommendations 7.0 Conclusions Appendices Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 SWOT analysis PEST analysis Selection of new outsourced manufacturer for products YY and ZZ VP  “own  brand”  proposal Inventory valuation Calculations for outsourced manufacturers P and Q for licensed action figures Email on the key criteria for the selection of outsourced manufacturers 1.0 Introduction Jot  is  a  small  unlisted  company  which  designs  and  outsources  the  manufacture  of  a  range  of  children’s   toys. It has grown rapidly since it was established in 1998. It is currently experiencing manufacturing problems due to an earthquake affecting 2 of its outsourced manufacturers and also quality problems with another outsourced manufacturer. The quality of the company’s  products,  upon  which  its  reputation  is  based,  must  not  be  compromised. The Jot brand name is known for quality toys but it is important that its products appeal to cost- conscious retailers and price......

Words: 9917 - Pages: 40

Case: Mattel and Toy Recalls

...CASE: MATTEL AND TOY RECALLS Toy Industry Our presentation started with the industry introduction. Based on the case, toy industry was growing if we compared the results with the previous year. In 2007, the global toy market was around $71 billion business. Though 36% of the market was on the hands of North America, the growth pace was slower than Asia. Especially in China and India it was estimated that market would increase 25% more than previous year. The toy industry in USA had about 880 companies. Dominant players were Mattel, Hasbro, RC2, JAAKS Pacific, Marvel, and Lego. Moreover, big retailers were entering to the market under their own brand names creating threat for existing toy companies. Toy market categorized many segments in USA market, among them infant/preschool toy segment was the largest and stagnant. Noticeable growth occurred in youth electronics and video games. Production of the toys concentrated in China with 60%. Company Information Mattel, Inc. founded by Harold Matson and Elliot Handler at a garage in 1944. The company name was generated by using letters from founders’ last and first names. Mattel’s first products were picture frames and doll house furniture. Barbie doll was introduced in 1959 and Ken product followed it. With these products, Mattel guaranteed its growth. Hot Wheels product established Mattel’s position as an industry leader. Company’s products were organized in 3 different business groups: Mattel Girls & Boys Brands, Fisher......

Words: 862 - Pages: 4

Specialty Toys Case

...Specialty Toys- Specialty Toys, Inc. sells a variety of new and innovative children’s toys. Management learned that the preholiday season is the best XXXX XX introduce a new toy, because many families use this time to look for new ideas for December holiday gifts. When Specialty discovers a new toy with good market potential, it chooses an October market entry date. In order to get toys in its stores by October, Specialty places one-time orders with its manufacturers in June or July of each year. Demand for children’s toys can be highly volatile. If a new toy catches on, a sense of shortage in the marketplace often increases the demand to high levels and large profits can be realized. However, new toys can also flop, leaving Specialty stuck with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how many units of a new toy should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. For the coming season, Specialty plans to introduce a new product called Weather Teddy. This variation of a talking teddy bear is made by a company in Taiwan. When a child presses Teddy’s hand, the bear begins to talk. A built-in barometer selects one of five responses that predict the weather conditions. The responses range from “It looks to be a very nice day! Have fun” to “I think it may......

Words: 867 - Pages: 4

Gg Toys Case Analysis

...G. G Toys Case Analysis By Managerial Accounting June 16, 2013 Costing systems are components of a broader accounting system used by a given company or organization. Their main function is to keep a focused eye on expenditures made by the company in question. Synthesis of Existing Cost Models to Meet System of System Needs, p.86. G.G. Toy's production process for dolls started with the basic raw materials needed for the bodies of the dolls, wool and things for the hair and clothing and all of these things were consist in production initially. Then, in its modern Chicago manufacturing facility, the company machine-molded the vinyl and resin into doll bodies and even had varies different styles and designs for the clothing. While using the same equipment and labor, they had to schedule when each of these modern jobs could be completed. I believe that explains why there was less units produced. Today’s new manufacturing environment requires new cost-accounting systems as well as new technology. It’s simple, updating the present system can achieve greater benefits in terms of producing and providing information for decision making in the future. (Updating Standard Cost Systems, Cheatham, C, Quonum Books, 1993). Therefore, I believe that G.G. Toys should change its existing cost accounting system from traditional costing to activity-based costing in the Chicago plant. Activity-based costing also known as ABC is a costing methodology that identifies......

Words: 1257 - Pages: 6

Mattel Toys Recall Case

...for Mattel’s toy recall: manufacturing problems which refers to the use of lead paint by Chinese manufacturers; design problem as a result of increasing use of small, powerful magnets that have the risk to be swallowed by children if detached, and; product misuse by young creative children which may cause potential danger to them. Among those three reasons, only manufacturing problems are potentially the result of outsourcing. The design and product misuse issues were not the responsibility of contract manufacturers. Outsourcing Pitfalls While outsourcing can reduce costs for companies, it can also give rise to a series of problems if those companies fail to see a clear picture of their outsourcing partners and fail to identify all the possible pitfalls. Specifically for Mattel, the Chinese toy manufacturer gained their competitive advantages by achieving low costs. However, since they were facing pressures both from tremendous negotiating power of large manufacturers such as Wal-Mart and the monetary policy change that pushed cost higher, they had little incentive or ability to increase their investments in quality programs. The cost-sensitive nature of the toy manufacturing industry is what gave rise to the recall problems. Another issue of the Chinese manufacturers is the lack of corporate social responsibility. End-customers buy the toys from a retailer and understand that it is a Mattel toy and not an Early Light Industrial toy or a Lee Der Industrial toy. The......

Words: 1060 - Pages: 5

Toy Central Case

...Risks at Toy Central Corporation Christine E. Earley and Fred Phillips INTRODUCTION [pic]s a senior in a professional services firm, you have been assigned to plan the financial statement audit of a private company named Toy Central Corporation (TCC). In addition, the partner on the engagement has asked you to identify business risks that could adversely affect TCC’s sustained profitability, so that they can be brought to the attention of the company’s board of directors. These tasks will require you to draw on your knowledge of supply chain management, marketing, internal controls, audit assertions, and financial accounting. COMPANY BACKGROUND Toy Central Corporation (TCC) designs, manufactures, and markets a variety of toys, which are sold primarily to large national retailers like Wal-Mart, Toys R Us, Kmart, and Target. TCC is a small company compared to competitors Mattel and Hasbro; nevertheless, TCC’s managers believe its toys are among the best in the world. Unlike the larger toy makers, which bring thousands of toys to market each year but experience success with only a fraction of them, TCC has enjoyed success with a small portfolio of brands and products, representing three categories: (1) soft toys, consisting primarily of its Cuddle Monsters stuffed animals; (2) hard toys, including metal-cast and plastic-cast toys like Fast Racers cars and Acto action figures; and (3) digital toys, consisting of video game software under development. Like most toy......

Words: 2391 - Pages: 10

University Toys Case

...“CASO: UNIVERSITY TOYS” MA06 Métodos Cuantitativos para la toma de Decisiones I. Problemática y objetivos del caso de estudio University Toys” ha desarrollado una nueva línea de productos correspondiente a una serie de figuras de acción de profesores de Administración (BSPAF’s por sus siglas en inglés) las cuales son caracterizadas a partir de profesores populares de la Escuela de Negocios. La administración necesita decidir cómo comercializar los muñecos. Una opción es empezar la producción inmediatamente y simultáneamente lanzar una campaña publicitaria en el periódico universitario. Esta opción costaría 1,000 USD. Basándose en experiencias pasadas, las nuevas figuras podrían venderse bien o fallar irremediablemente. En consecuencia, las predicciones para cada uno de los dos posibles resultados son: 2,500 unidades de ventas totales en el mejor de los casos o 250 unidades en el peor. “University Toys” recibe un ingreso de 2 USD por unidad vendida. La administración de hecho piensa que hay una probabilidad de 50% de que el producto se venda bien (vender 2,500 unidades) y 50% de probabilidades de que no lo venda bien (vender 250 unidades). Otra opción es realizar una prueba de mercado del producto. La empresa podría construir unas pocas unidades, poner un anuncio en la librería universitaria y ver cómo se vende sin hacer ningún gasto en publicidad. Esto requeriría menos inversión para la corrida de producción y ningún desembolso en publicidad. También se tienen dos...

Words: 1112 - Pages: 5

Specialty Toy Case

...Specialty Toys- Specialty Toys, Inc. sells a variety of new and innovative children’s toys. Management learned that the preholiday season is the best XXXX XX introduce a new toy, because many families use this time to look for new ideas for December holiday gifts. When Specialty discovers a new toy with good market potential, it chooses an October market entry date. In order to get toys in its stores by October, Specialty places one-time orders with its manufacturers in June or July of each year. Demand for children’s toys can be highly volatile. If a new toy catches on, a sense of shortage in the marketplace often increases the demand to high levels and large profits can be realized. However, new toys can also flop, leaving Specialty stuck with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how many units of a new toy should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. For the coming season, Specialty plans to introduce a new product called Weather Teddy. This variation of a talking teddy bear is made by a company in Taiwan. When a child presses Teddy’s hand, the bear begins to talk. A built-in barometer selects one of five responses that predict the weather conditions. The responses range from “It looks to be a very nice day! Have fun” to “I think it may......

Words: 867 - Pages: 4

Case Analysis – Specialty Toys

...Case Analysis – Specialty Toys 1. Senior sales forecaster predicted and expected demand of 20,000 units with .95 probability that demand would be between 10,000 and 30,000 units. P (10,000 < x< 30,000) = .95 (30,000-20,000)/1.96 = 5,102 X = the demand of Weather Teddy Mean µ = 20,000 Standard Deviation α = 5,102 The normal distribution of the demand for the Weather Teddy is represented in the graph below. This is based off of the forecast of previous selling history of other similar toys. The forecast shows that the demand for the Weather Teddy will be at 20,000 units, but with a probability of .95 of selling anywhere between 10k to 20k units. Therefore, with the information given the standard deviation of this forecast is at 5,102. 2. With various order quantities suggested by members of the management team, it would be wise to compute the probability of a stock-out for each of the order quantities suggested. The probability of a stock-out is the inverse of the probability that the quantity sold is less than or equal to the amount purchased by the company. 1st Formula used: z = (x - µ) / σ The probability of a stock out is calculated by subtracting the probability found in the chart from 1. Suggested Quantity to Order | Probability of a Stock-Out | 15,000 | 83.65% | 18,000 | 65.17% | 24,000 | 21.77% | 28,000 | 5.82% | 3. Based on the various order quantities suggested by members of the management team, a simple profit analysis...

Words: 914 - Pages: 4

Speciality Toys Case Study

...Specialty Toys- Specialty Toys, Inc. sells a variety of new and innovative children’s toys. Management learned that the preholiday season is the best XXXX XX introduce a new toy, because many families use this time to look for new ideas for December holiday gifts. When Specialty discovers a new toy with good market potential, it chooses an October market entry date. In order to get toys in its stores by October, Specialty places one-time orders with its manufacturers in June or July of each year. Demand for children’s toys can be highly volatile. If a new toy catches on, a sense of shortage in the marketplace often increases the demand to high levels and large profits can be realized. However, new toys can also flop, leaving Specialty stuck with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how many units of a new toy should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. For the coming season, Specialty plans to introduce a new product called Weather Teddy. This variation of a talking teddy bear is made by a company in Taiwan. When a child presses Teddy’s hand, the bear begins to talk. A built-in barometer selects one of five responses that predict the weather conditions. The responses range from “It looks to be a very nice day! Have fun” to “I think it may......

Words: 867 - Pages: 4

Toy Case

...1996 Toy World, Inc. Early in January 1994, Jack McClintock, president and part owner of Toy World, Inc., was considering a proposal to adopt level monthly production for the coming year. In the past, the company’s production schedules had always been highly seasonal, reflecting the seasonality of sales. Mr. McClintock was aware that a marked improvement in production efficiency could result from level production, but he was uncertain what the impact on other phases of the business might be. Toy World, Inc. was a manufacturer of plastic toys for children. Its product groups included toy cars, trucks, construction equipment, rockets, spaceships and satellites, musical instruments, animals, robots, and action figures. In most of these product categories the company produced a wide range of designs, colors, and sizes. Dollar sales of a particular product had sometimes varied by 30%-35% from one year to the next. The manufacture of plastic toys was a highly competitive business. The industry was populated by a large number of companies, many of which were short on capital and management talent. Since capital requirements were not large and the technology was relatively simple, it was easy for new competitors to enter the industry. On the other hand, design and price competition was fierce, resulting in short product lives and a relatively high rate of company failures. A company was sometimes able to steal a march on the competition by designing a popular new......

Words: 2896 - Pages: 12

Gg Toys Case Solution

...($) 21.00 36.00 30.00 Margins (New) 28% 2% 21% Margins (Old) 9% 34% 21% Based on these findings, below are the recommendations GG Toys should consider to enhance profitability (in order of priority): • We observed non-viable cost patterns due to high customization and low unit orders by retailers for specialty branded doll #106, hence the management should look at better sales & marketing strategy to take bulk orders • Try to reduce overall production runs by aggregating different orders, thereby increasing batch size. Marketing strategy of delay in turnaround time is required to achieve this • Move from specialty branded doll #106 to other specialty branded dolls as they have higher margins (see table 2 in appendix) • Revisit the selling price of specialty branded doll #106 based on the customization requirements by the customers. • Optimization of machinery so that production setups are not required for small customizations which can be managed manually. • Decrease machine runtime by adopting newer technology. Additional information needed to be able to make these recommendations: • Direct costs & selling price for other specialty branded dolls. • Market dynamics to understand the change in demand with slight increase in turnaround times or moving to other specialty branded dolls • Low competition market where GG toys can vary the cost of specialty branded doll #106. • Availability of new technology for optimization of the process. 3. Difference......

Words: 1071 - Pages: 5

Specialty Toys Case Study

...Specialty Toys Case Study 1. The mean is 20,000 units and there is a 95% probability that demand will be between 10, 000 and 30,000 units. This means there is a .025% chance that the demand will be outside of 10,000 and 30,000. Using the chart, we find that z=-1.96. Using the following calculation, we find: z= x- μ σ -1.96 = 10,000 – 20,000 σ σ=5102 Standard deviation σ = 5,102 μ = 20,000 mean 2. Stock outs were calculated by the four management numbers. Equation is: z = (x – μ)/ σ 15,000: Z = (15,000-20,000)/5102 z = -0.98 Then, reference the cumulative probabilities for standard deviation table in the beginning of the book to identify what -0.98 represents, which is .1635. Since stock outs are any quantity greater than what management suggested, they need to be subtracted from 1. 1 - .1635 = .8365 which = 83.65% Same logic/steps for the rest of the values: 18,000 24,000 28,000 Z = (18,000-20,000)/5102 z=(24,000-20,000)/5102 z=(28,000-20,000)/5102 z = -.39 z=.78 z= 1.57 1 - .3483 = .6517 1 - .7823 = .2177 ...

Words: 1198 - Pages: 5

Gg Toys Case

...Gg Toys Case St G.G.Toys Thedecline margins our popular in on Gtoftry doIIproduct become has intolerable. production Increasing haae costs dropped pretaxmarginto less our than10%, below historical our 257omargins, wearegoing If far to increase margins, need consider our we to drastically shiftingour production towards sfecialtydolts aie that earning large prnniumin priceoaer standard line. a our doll -Robert Parker,President, G.G.Toys Background Robert Parker, president of G.G. Toys, was discussing last month's operating results with Audrey Hausner, G.G.'s conkoller, and David Morehouse, G.G.'s manufacturing manager. The meeting was taking place in an atmosphere tinged with apprehension because margins on thelr most popular product, the "Geoffrey doll," had been declining rapidly in the last few years due to rising production costs (summary operating results for the previous month, March 2000, arc shown in Exhibits 1 and 2). Parker saw no choice but to shift the company's product mix towards specialty dolls that carried a high price premium, and thus, a 34% margin. G.G. Toys was a leading supplier of high-quality dolls to retail toy stores throughout the U.S, The comPany had started with a unique design for molding highly durable dolls using vinyl and resin materials. G.G. quickly established a loyal customer base among retailers because of the high quality and popularity of its manufactured dolls. It soon established a major presence in the market with its high-volume...

Words: 329 - Pages: 2

Confronta | PCFixKit | Mori no Densetsu Movie (1987)