Gg Toys Case Analysis Essay

1246 Words Nov 25th, 2013 5 Pages
G. G Toys Case Analysis

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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
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Using activity-based costing will allow different overhead set up for each type of doll, production can be done at one time and the results would produce different contribution margins.
The Springfield plant is simply doing one thing and that is producing cradles, there is no need for a different costing system there. Using the cost study conclusions, the actual unit cost for the Geoffrey doll is $15.21. The actual unit cost for specialty-branded doll #106 is $35.10 and the actual unit cost for the cradles is $23.72. See the profitability of each doll under the new and old systems have been compared and contrasted below. (old system) Geoffrey Doll Specialty-Branded #106 Cradle
Standard unit cost($) 19.19 23.74 23.70
Selling price($) 21.00 36.00 30.00
Contribution margin($) 1.81 12.26 6.30
CM Ratio 9% 34% 21% | | (ABC) Geoffrey Doll Specialty-Branded #106 Cradle
Standard unit cost($) 15.21 35.10 23.72
Selling price($) 21.00 ` 36.00 30.00
Contribution margin($) 5.79 0.90 6.30
CM Ratio 28% 3% 21% |

When comparing the product costs with each other, the

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