Pixystems Toys Information
Pixystems Toys is a leading manufacturer and distributor of children’s toys across the globe through
third party distributors (non-company owned stores) and through their flagship store located in New
York. The company is headquartered in Cleveland, Ohio, and has manufacturing locations in Brazil,
China, Mexico, and across the United States. Product development is also done in Cleveland with new
products released every six months. The majority of the toys manufactured by Pixystems are top
sellers that are sell outs during holidays. Some of their most well-known products include: toy cars,
plush dolls, and electronic games.
The company does all back-office processing at their headquarters where they have shared service
centres for accounts payable (AP), payroll, and inventory management. These shared service centres
handle processing of transactions related to these processes across the globe driving a consistent
process and controls. Customer sales are managed at the flagship store by the local sales team while
online sales and sales to distributors are handled at headquarters.
Pixystems recently hired a new CFO who is focused on improving the financial performance of
Pixystems and improving operational efficiency in AP, payroll, inventory, and sales. She has
challenged each of the managers of these business processes to identify areas for improvement and
quickly address errors. Internal audit has also been working closely with the CFO, managers, and
external auditors to identify control gaps, areas of non-compliance, and operational efficiencies.The CFO has also engaged your team to review these business processes using Pixystems’ data and
performing analytics. She would like you to make any necessary recommendations, identify data
issues, and provide her and the managers with insights gained through your analytics. During your
last meeting, she shared the following information with you:
The Internal Audit team has identified errors within AP that are negatively affecting working
capital. The root cause of these errors has not yet been determined but is thought to be a
control gap that will need to be addressed by the AP manager and subsequently tested by the
Cash flows have not been consistent over the past year. Pixystems sees the majority of sales
taking place around holidays and uses a retail fiscal calendar to accommodate the cyclical
nature of sales.
At least two inaccurate payments to key vendors have been identified by the AP manager and
monitoring for duplicate or erroneous payment is not conducted.
Payments within terms are also not monitored and leverage of discounts is not reviewed to
ensure quantity levels have been met and Pixystems receives the appropriate discounts.
Majority of employees working at headquarters and managers at the manufacturing locations
are salary employees and not entitled to overtime (twice hourly rate) payments. All other
workers should be paid hourly.
Payroll is paid to salaried employees on the 1st and 15th of each month through direct deposit.
Hourly employees are paid bi-weekly (every two weeks).
Executive team receives an annual bonus each year which is paid at the end of the year. The
amount is dependent on the employee’s overall performance ranking and Pixystems’
performance as a whole.
Average annual employee pay increase is between 3-5% for salaried employees
Inventory levels of finished goods at the flagship store are set by headquarters with sales and
Finished goods inventory is owned by the manufacturing facility until loaded on a truck (FOB
Shipping Point) to a distributor or sent to the flagship store which then takes ownership.
Online sales directly to customers are sent from the manufacturing facility
Physical inventory is taken once a year and the completion of cycle counts is at the discretion
of the facility manager.
Adjustments to inventory levels due to spills, damaged goods, old age, etc. are done once per
month and are approved by the facility manager and headquarters.
Distributors must place orders from Pixystems with a minimum of a month lead time. Special
and expedited orders must be approved by headquarters.
Available inventory levels for direct customer sales are communicated via the online ordering
system which allows customers to order up to the quantity available at the manufacturing
facility or distribution center.
Sales representatives are assigned to specific distributors and are responsible for both
increasing sales and managing the relationship Pixystems has with the distributor.
Promotions and discounts must be approved by sales and marketing
Sales are highest around the holiday and certain toys quickly become out of stock
There are no bids yet.
All Rights Reserved, Dataedy.com 2020