Toy World, Inc was a manufacturer of plastic toys for children , their product had wide range of designs, colors and sizes. Manufactures of plastic toys was an highly competitive business, due to the capital requirement were not large and did not need high technology. So it was easy for new competitor to enter the industry. Another problem was company east to steal other company's designing of the new product in the toy industry. Toy world had rapid growth each year since founding business since 1976. Company's sale was highly seasonal, about 80% of sale usually sold between August and November and sale mainly to variety store chains and toy brokers. The company had regularly borrowed money from City Trust bank and company had a loan of 752,000 outstanding at the end of 1993. The company willing to extend the credit line up to 2 millions in order to expand the business, and the interest rate would be 9% and would be pay amortized $25,000 in June and December each year.
             After I analyze the case, I found that the level product's net profit was higher the seasonal product by compare both of these income statement. According to analyze, we can see that the Account-payable and Current liabilities of seasonal production level production from the balance sheet, but the seasonal production's shareholder's equity is less than the level production. From the selected ratios, we can see that the profitability ratio under level production – 5.3%, is higher than that under the seasonal production – 3.5%. The collection period had been shortening from 124 days to 78 days under level production. And according to the Mr. Hoffman 's proposal, it was showing that company can save $225,000 on overtime wage and about 265,000 on direct labor by changing production method from seasonal to level production. Hence I would recommend that Toy World, inc should considered to use level production to produce i...