Toys : Toys And Its Product Mix

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Management at G.G. Toys is concerned with decreasing margins on a historically profitable doll. Based on information derived from G.G. Toys’ traditional costing system, company president Robert Parker is considering several options to boost flagging margins. This report will analyze information provided in the G.G. Toys case study to determine whether G.G. Toys has an accurate representation of the true profitability of items in its product mix. It will also offer recommendations on whether G.G. Toys should transition from its current costing system and compare the profitability of items in the product mix between the current and proposed costing systems, what factors might influence revenues for G.G. Toys at a specific point in time and whether it would be prudent for G.G. Toys to expand its product mix to include other dolls. Should G.G. Toys Maintain Status Quo in Costing? In the past, firms planned and controlled their operations using accounting information assumed to accurately reflect the costs of their products; however, the broad averaging allocation of indirect costs were actually providing misleading information to management and resulted in suboptimal decision making. (Cokins, 2006) Over the last few decades, most firms have expanded product and service lines and utilized a wider variety of distribution channels as well as serve a broader customer base. Such complexity results in difficulties obtaining an accurate representation of a product’s true cost. In

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