case study GG Toys

Topics: Cost, Doll, Costs Pages: 4 (1070 words) Published: December 4, 2014
G.G.
 Toys
 –
 Nele
 Rieve
 –
 E01487695
 –
 10/14/2014
 

 
G.G.
  Toys
  is
  a
  leading
  manufacturer
  of
  high-­‐quality
  dolls
  located
  in
  the
  US.
  The
 
company
  is
  popular
  for
  its
  “Geoffrey
  dolls”
  but,
  due
  to
  rising
  product
  costs,
  has
 
included
  customized
  dolls
  and
  cradles
  in
  its
  product
  mix.
  Two
  plants
  are
  used
  for
 
the
 manufacturing
 of
 their
 products,
 one
 in
 Chicago
 and
 one
 in
 Springfield.
 While
 all
 
dolls
 are
 produced
 in
 the
 Chicago
 plant,
 the
 Springfield
 plant
 is
 used
 to
 assemble
 the
 
doll
  cradles.
  According
  to
  their
  traditional
  costing
  system,
  the
  margins
  of
  the
 
Geoffrey
  doll
  were
  declining
  as
  a
  result
  of
  the
  increasing
  product
  costs,
  whereas
  the
 
specialty-­‐branded
  dolls
  proved
  to
  have
  high
  margins.
  However,
  in
  order
  for
  them
  to
 
produce
  these
  customized
  dolls,
  they
  had
  to
  lower
  the
  production
  of
  the
  Geoffrey
 
doll.
  Furthermore,
  G.G.
  Toys’
  management
  was
  considering
  adding
  two
  more
 
products
 to
 its
 mix:
 the
 holiday
 reindeer
 dolls
 and
 handmade
 Romaine
 Patch
 dolls.
 
 

 

 
As
 of
 the
 time
 when
 the
 case
 was
 written,
 G.G.
 Toys
 was
 using
 a
 traditional
 job-­‐order
 
costing
  system
  to
  calculate
  its
  manufacturing
  overhead
  by
  using
  only
  one...
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