PLEASE ANSWER QUESTIONS 1-4 AFTER YOU READ

QUESTIONS:

1. From the standpoint of an individual concerned with accounting controls, discuss and evaluate Johnson Toy Company's present policies for handling returned items.

2. Answer Question 1, but from the standpoint of an individual interested in marketing.

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?

4. Should this policy, if adopted, be printed and distributed to all of the retailers who handle Johnson Toy Company products? Why or why not? If it should not be distributed to them, who should recieve copies?

CASE 5.1 Johnson Toy Company farmily to be imolved in the toy besinese. The firm mas. there were between 1.5 milline and 2 milliso fargle firm ufoctures and selle top throughout the United Sates. the logger delle in retal sterts and Sullivan had indi-. The toy business in very seasonal, with the majority of cated there wire 2.587.112 conplete usits in virieas in the lase spring-early nammer period. when mies of trying to coant all the unascmbied compocent perts. outdoor itrms are good. The firm relies on several basic designa of toys - rectived from suppliers, devite the cancellation. which have low profit margins bat are steady selless- Any aid, "Lerk wait a firw weeks to get a complett and an aew designs of ancoeventional tons, whose coant of all the dolls asd all the unascrided compoIntroduction is ahroys ridy bat promise high profita if nent parta. Lor.. Tm maming you to work with Carolyn the hirm become popular. The firm advertises regalarly and Kevin to develop recommendations as to how wr on Satunday moming television ahom for children. San recyde the largle lim itern into something we can Late last year, jast before Christmas, the loknow sell. Given the numbers imvelved. Tm willing to turn out Toy Company introdaced fungle lim the joser doil, mod- some innocuour doll and sell it for a limle more than the ded after a popular television itone. Sales divrodketed, coit of recydigs because we cant take a complete los and corry retailers stock of langle lim the loggr dola was an all these densed langle fim dold Greg sys we heve sold ous in mid-Decimber the fohnson Cempany could searly 2.6 ailion of them to play with, wo leth think of have sold several million more anits if they had been something" thin dell. Anry and Lori made commitments to manuac. "Doel forget that there may be nearly 2 million in the ture 10 mithion fangle lim the joger dolls this year and to hands of the dealen and that they will return them." introdace a wide line of accessory ilems, which they boped "Retars them:" questicned Amy. "They're not every dell owner would also want to have. Production was defective. Thats the enly reason we accept returna well ander way, and many retallers were happy to accept. The retuilers made a poor choice. lik the aame as if dolle in latuery and February because they were will a they andered sleds and then had a winter with no snow. fast-sdling item, even thosph the toy business itself was We ase no more ropensible for largle limis sex life than diugobh during these monthe Unfortanately, in the aftermath of a Valentine's Cheryl Garidi spoke ape "You may be underes. Day party in Hollywood, the televiaion actor who por- timating the problem, Amy. Oee of our policies is to trayed langle lim the logger became invoived in a widely. accept the deiler's word as to what is defrctive. and right pablicised serual misadventure, the detalls of which now there are a lot of dealers out there claiming defocts shocked and disgased many readers and TV viewers, in the langle lim dolls. Ooe reason that Kovin cant get and we woold be enburnased to describe them. Ratings at accurate count in that retarned dolls are showing up af the television series plammetrd, and wehin a month in an our receiving dock and grming mised up with our inhad been droped frum the air. On March 1, the jobrason ack invertor?" fim the foger dolla, altough in had to per penalies to "Weire not paying the firight, almare are wel" said Sallinan. That was one inem 1 wanted to raise while assame that rikk the retailer is willing to take more of we were together," our merchandise" "We we cant allow that" exclaimed Amy. "Dont be so sure," responded Sallivan. "The "Tnformal ones," was Coggins' response. "It account in cuestion has paid every bill hes owed us on depends on the salesperson and the account. I don't time for 40 years. Do you want me to tell him we wont think there is mach abues, alhough there is nome" reimburse himf" "This is worse than 1 imagined," said Amy. "last cumstances?" avked Amy. warn-scratched, dented, and damaged. That makes in valoe of returned items that wind up back here. Carolyn's "I wiah 1 had an eay solution," said Coggins. "We "You know, Tm finding out more information ased to let oar salespeople give credit for defects and about inventories and returns than 1 thought existed," then dotroy everything out in the field. Unfortunatcly, said Amy. sorne abused the vytem and renold the toys to discount stores. At least now we can see everything weire buying the ochers all supressed smilis. beck 1 agree we are stuck with some shopwern items, Amy decided to ignore Loris remark, and she beck our salespeople are out there to sell, and nothing looked at Guridi and asked. "Are you aatiafied with your woild ruin a Hig ale gidar than for oar salespeople to control over inventories, Cheryfl" shopworn" "Well, not antil now," responded Cogsina. "Bat penon knows only him or her own territory. When Carolyn with this langle fie salu we can erpect the inse to and I art trying to montor the ules of worme new item, we occur. If fact, 1 have several phose pueries on my desk never know whether ith bombling in some areas and riding now," said Amy. some were able to write bigger ordern by inplyigg that we erver want to lear dhout the defectives from theie "That wounds like a better policy," aid Amy. "How knowledge about volume of parterns of returns antiliky worked fine. Now a number of large accounts are plead- who do nothing but deal with this problem? The retailing 'ipecial circumatances' or threatening to sue if we ers would be told to hang onto the defiectives antil eur dont take back the dolls" "They have no grounds for suit," declared Amy. Coggins replied, "That would be expenaive. buyers are refusing to see our sales staff until the matter thing and would expect our claims rep to be there immeis resolved. I fust heard about this yesterday and meant diately. Besides, it might undermine our selling efforta if pack, they don' know how to prepare shipping docugoods were actually destroyed. What if they are truly adopted by the lohnson Toy Company. Be certain to list defective, but improperly disposed of, then fall into the circumatance under which exeptions would be allowed. hands of children who pley with them and the defect hands of children who play with them and the defect 4. Should this polig, if adopted be printed and distributed to all of the retailes who handle lohnon Tor Company products? Why or why not? If it should not be distributed to them, who should receive copies? 5. Assume that it is decided to prepare a statement on returns to be distributed to all retallers and that it ahould be less the langle lim product involves nuch a large volame that 7. Ausame that you are Cheryl Garldi, the firmi logistia it is pradent and reasonakle to think up another product manager. Do you think that the returns policy fevored by that utilizes mary of the parts. It would even pay to modify anme machines for disarsembling the Jungle Jim doll." beat for the firmt Why or why not? "As 1 liaten to this discussion," aald Lori, "one Question 3 takes effect, how would yoe handlic the inme: fact becomes obvoux We will never have very good 1. From the standpoint of an individual concerned with accounting controls, discuss and evaluate Johnson Toy Company's present policies for handling returned items. 2. Answer Question 1, but from the standpoint of an individual interested in marketing. 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? 4. Should this policy, if adopted, be printed and distributed to all of the retailers who handle Johnson Toy Company products? Why or why not? If it should not be distributed to them, who should receive copies