Sales and Johnson Toy Company
Logistics 1 – Introduction to Logistics
Case 5-1 “Johnson Toy Company
(1) From the standpoint of an individual concerned with accounting controls, discuss and evaluate Johnson Toy Company’s present policies for handling returned items.
From the accounting control perspective, the financial records are evidently inaccurate leading to poor overall control, e.g. Greg Sullivan confidently indicated that his records shows 2.6 million Jungle Jim dolls are in stock for recycling; however, Carolyn Coggins expressed the concern that dealers will return the 2 million dolls currently held in their stock. This discrepancy is due to vague and poor return policies provided to management, e.g. field sales reps would customize return policies that is difficult to monitor and may drastically deviate from other sales reps’ policies.
(2) Answer Question 1, but from the standpoint of an individual interested in marketing.
From the marketing standpoint, i.e. field sales representatives, they tend to favour less on procedural controls for the reason of wanting/needing the flexibility to bargain with retailers.
(3) Propose a policy for handling returns that should be adopted by the Johnson Toy Company. Be certain to list circumstances under which exceptions would be allowed. Should it apply to the Jungle Jim dolls?
Returns Policy
Return Conditions
1. High-Volume Customers: defined as purchasing $80, 000 (arbitrary number) or over of merchandise from Johnson Toy Company per year.
A. Damaged goods that are functional may be returned to Johnson Toy Company’s plant at Johnson’s expense with full refund.
B. High volume customer will receive a straight 2% deduction off of the wholesale selling price to cover defectives— regardless of defectives classified as cosmetically damaged or slow selling items, except when unable to sell due to special circumstances (see Section 3)
2. Low-Volume Customers:
A. Damaged goods that are functional may be returned to Johnson Toy
Case 5-1 “Johnson Toy Company
(1) From the standpoint of an individual concerned with accounting controls, discuss and evaluate Johnson Toy Company’s present policies for handling returned items.
From the accounting control perspective, the financial records are evidently inaccurate leading to poor overall control, e.g. Greg Sullivan confidently indicated that his records shows 2.6 million Jungle Jim dolls are in stock for recycling; however, Carolyn Coggins expressed the concern that dealers will return the 2 million dolls currently held in their stock. This discrepancy is due to vague and poor return policies provided to management, e.g. field sales reps would customize return policies that is difficult to monitor and may drastically deviate from other sales reps’ policies.
(2) Answer Question 1, but from the standpoint of an individual interested in marketing.
From the marketing standpoint, i.e. field sales representatives, they tend to favour less on procedural controls for the reason of wanting/needing the flexibility to bargain with retailers.
(3) Propose a policy for handling returns that should be adopted by the Johnson Toy Company. Be certain to list circumstances under which exceptions would be allowed. Should it apply to the Jungle Jim dolls?
Returns Policy
Return Conditions
1. High-Volume Customers: defined as purchasing $80, 000 (arbitrary number) or over of merchandise from Johnson Toy Company per year.
A. Damaged goods that are functional may be returned to Johnson Toy Company’s plant at Johnson’s expense with full refund.
B. High volume customer will receive a straight 2% deduction off of the wholesale selling price to cover defectives— regardless of defectives classified as cosmetically damaged or slow selling items, except when unable to sell due to special circumstances (see Section 3)
2. Low-Volume Customers:
A. Damaged goods that are functional may be returned to Johnson Toy