American Toy Company—The Zapper

6 Pages Posted: 21 Oct 2008

See all articles by Mark E. Haskins

Mark E. Haskins

University of Virginia - Darden School of Business

Abstract

This case provides a setting for analyzing the effects of various depreciation methods and expenditure capitalization decisions on divisional return on asset (ROA) measures.

Excerpt

UVA-C-2040

Rev. Oct. 13, 2014

AMERICAN TOY COMPANY—THE ZAPPER

Karen McNeely, general manager of the modern toy division of American Toy Company, had just met with her design engineering staff regarding its proposed new laser toy—the Zapper. Her staff presented an exciting and persuasive argument that the toy was a hit from both the production and market standpoints. McNeely was convinced of the merits of the project and was now preparing a new budget for the division that included the Zapper line prior to sending a formal request for funds to the CFO of American Toy. She was specifically interested in what effect putting the toy into production would have on the asset book-value base and profit before tax (PBT) of her division. If successful, the new laser toy could significantly help McNeely meet her division's return-on-assets (ROA) goal for the current fiscal year, now a little more than a week old.

American Toy Company

American Toy, a midsized toy manufacturer, produced toys for a wide range of age groups. The company developed ideas for toys and often adapted general-purpose machines to produce complementary toys for its established lines to distribute in adjacent, promising markets.

. . .

Keywords: accounting method assets depreciation financial diverse diversity protagonist female

Suggested Citation

Haskins, Mark E., American Toy Company—The Zapper. Darden Case No. UVA-C-2040, Available at SSRN: https://ssrn.com/abstract=1276576

Mark E. Haskins (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924 -4826 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/haskins.htm

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