G G Toys Case Solution

Case Solution

This case highlights issues with management accounting and includes summary of product costing, excess capacity, variance analysis, and scrap costs.

Excel Calculations

Manufacturing Overhead

Plant Cost per unit

Machine Related Expenses per unit

Setup Labor per product

Shipment cost per unit

Cost per unit

Total Overhead Cost per unit

Product Cost for Geoffrey Doll,Speciality doll #106, Cradles

Direct Material

Direct Labor

Manufacturing Overheads

Profitability for Geoffrey Doll, Speciality doll #106, Cradles

Traditional Costing

ABC Costing

Questions Covered

Do you recommend that G.G. Toys change its existing cost system in the Chicago plant? In the Springfield plant, Why or why not?

Calculate the cost of a Geoffrey doll, the specialty-branded doll #106, and a cradle using the cost study conclusions.

Compare and contrast the profitability of each doll under the new and old systems. Based on your recomputed product costs, what actions would you recommend the company consider to enhance its profitability? What additional information would you like to have to make these recommendations?

How should G.G. Toys account for the excess capacity created to produce the holiday reindeer dolls? Qualitatively, how will this impact your calculated cost of the Geoffrey doll and the specialty-branded dolls in question number 2? Explain your method and its impact. 

What explains the difference between forecasted and actual revenue for the Chicago plant during March of 2000? What other information would you collect to help explain this difference?

Do you recommend G.G. Toys produce the Romaine Patch doll? Why or why not?