Vinod Gupta School of Management, IIT Kharagpur

Cost Management & Accounting Report

Soft Toys

Group Number – 29

Roll number Student Name

23BM63009 Akhil Deepak Umare
23BM63081 Lakshya Saini
23BM63087 Mohika Agrawal
23BM63109 Priyanshi Saxena
Abstract
Gift Palace is a well-known soft toy retail shop that offers a wide variety of high-quality toys. This
paper outlines the processes adopted by Gift Palace, including inventory management, visual
merchandising, sales operations, customer service, store operations, and relationship management.
Also, the details of the costs incurred by Gift Palace, including procurement cost, ordering cost,
and overhead cost. Additionally, the paper classifies costs in terms of traceability and cost behavior
and provides financial reporting information. Finally, discusses strategies for improving
productivity and eliminating service, such as offering online ordering and pickup, establishing
strong relationships with suppliers, and sourcing products from multiple suppliers.

Introduction
Gift Palace is a well-known shop loved by children and adults alike, offering a wide array of soft
toys. They provide a diverse range, from traditional teddy bears to trendy characters, budgets
ranging from affordable to expensive. Whether it's a birthday, holiday, or any special event, Gift
Palace has the perfect toy. Gift Palace offers a wide variety of high-quality toys that truly satisfies
their customers. Their welcoming service and dedication to quality make it the go-to place for
anyone looking for the perfect soft toy.
Name: Gift Palace
Location: Tech Market, IIT Kharagpur
I. List the processes adopted by Gift Palace (A Soft Toys Retail shop)

1. Inventory Management:
Inventory management includes procurement activities like acquiring soft toys from
suppliers or manufacturers and organizing them within the store for easy customer access.
It involves consistently keeping a track of stock levels and ordering soft toys whenever
needed, such that maintaining supply chains with customer demand. This process focuses
on gathering a wide variety of soft toys and making sure they are stored and handled in the
best way possible.

2. Visual Merchandising & Display:

This involves setting up an appealing and strategic display of soft toys. This includes
creating visually appealing arrangements and frequently updating the display to attract
customers and encourage sales.

3. Sales Operations:
Managing sales transactions is very necessary. Efficiently processing purchases, handling
payments, issuing receipts, and managing returns or exchanges in a professional and
customer-friendly manner.

4. Customer Service:
This involves guiding customers in choosing soft toys, providing information about their
features, materials, and care instructions. It also emphasizes building lasting relationships
with customers to foster loyalty and encourage return visits. Also providing services like
gift-wrapping to ensure customer satisfaction in their purchases.

5. Store Operations:
Managing store opening/closing and maintaining store cleanliness are vital. Also,
organizing cash register operations and keeping a clean, organized store. These procedures
are essential for a shopping experience and efficient financial operations.
 6. Relationship Management:
Training and managing staff members for effective store operations. Also, establishing and
managing relationships with suppliers, negotiating terms, and ensuring consistent
availability of quality products.

II. Costs incurred by Gift Palace (A Soft Toys Retail shop)

Procurement Cost - The cost of acquiring goods or services from an outside supplier
Rs. 10,000

Transportation Cost - The cost associated with placing an order with a supplier, such as the cost
of postage, handling, and invoicing
Rs. 2,000

Packaging (Gift wraps, other decorative) - Packaging, such as gift wraps and other decorative
materials, serves a crucial role in the soft toy retail business
Rs. 100

Overhead Cost - The indirect costs of operating a business, such as rent, utilities, and salaries
Rs. 13,500

Overhead Cost Cost

Shop Rent per month Rs. 10,000
Employee Salary per month (1 employee) Rs. 1,500
Electricity Bill per month Rs. 1,000
Miscellaneous (Repair & Maintenance) Rs. 1,000
Total Rs. 13,500
 III. Classification of Cost in terms of Traceability and Cost Behavior

Traceability Behavioral
Particulars Direct Cost Indirect Cost Fixed Variable Mixed
Procurement Cost  
Transportation Cost  
Shop Rent per month  
Employee Salary per month  
Electricity Bill per month  
Packaging (Gift wraps, other  
decorative)
Insurance  
Miscellaneous (Repair &  
Maintenance)

IV. Financial Implications

Cost Inventoriable
Cost of goods sold (COGS)
Procurement Cost 10,000 Period
Transportation Cost 2,000 Period
Packaging Cost 100 Period
Operating Cost
Shop Rent per month 10,000 Product
Employee Salary per month 1,500 Period
Electricity Bill per month 1,000 Product
Miscellaneous (Repair & Maintenance) 1,000 Product
V. Improving Productivity and Eliminating Service

 Offer online ordering and pickup: This will allow customers to order toys online and pick
them up at the store, which will save them time and money. It will also reduce the
number of in-store transactions, which will free up your employees to help other
customers.
 Establish strong relationships with suppliers: Build trust and rapport with your suppliers
to ensure consistent product availability, quality, and competitive pricing and negotiate
with suppliers to obtain the best possible pricing, shipping arrangements, and payment
terms.
 Source products from multiple suppliers: Diversify supplier base to mitigate risks
associated with single-source sourcing and ensure product supply even in case of supplier
disruptions.