Cortex Business Solutions operates a trading partner network that allows firms to digitize their customer invoicing. Cortex focuses exclusively on North American Oil & Gas firms, which it calls “buyers." When a buyer signs onto the network, all of its suppliers are included in the network. Cortex generates recurring revenue primarily through a fee charged for each supplier invoice processed through the network. Sales are forecasted on the basis of transactions processed through the network, or "Billable Transactions." Thus, Sales #Billable Transactions x Price. = Last year, the average price was $2.18 per transaction. Billable transactions are modelled as follows: Billable transactions = #Buyers x #Suppliers per Buyer x #Transactions Where #Buyers = the number of oil and gas companies using the network #Suppliers per buyer = the average number of suppliers per buyer #Transactions = the average number of transactions per buyer-supplier pair Last year, there were 75 buyers on the network, each buyer had an average of 110 suppliers and the average supplier processed 553 invoices. Forecast sales for next year assuming that the number of buyers rises by 10% and the price per billable rises by 3%. (Assume that the average number of suppliers and transactions per supplier stay constant.)
Cortex Business Solutions operates a trading partner network that allows firms to digitize their customer invoicing. Cortex focuses exclusively on North American Oil & Gas firms, which it calls “buyers." When a buyer signs onto the network, all of its suppliers are included in the network. Cortex generates recurring revenue primarily through a fee charged for each supplier invoice processed through the network. Sales are forecasted on the basis of transactions processed through the network, or "Billable Transactions." Thus, Sales #Billable Transactions x Price. = Last year, the average price was $2.18 per transaction. Billable transactions are modelled as follows: Billable transactions = #Buyers x #Suppliers per Buyer x #Transactions Where #Buyers = the number of oil and gas companies using the network #Suppliers per buyer = the average number of suppliers per buyer #Transactions = the average number of transactions per buyer-supplier pair Last year, there were 75 buyers on the network, each buyer had an average of 110 suppliers and the average supplier processed 553 invoices. Forecast sales for next year assuming that the number of buyers rises by 10% and the price per billable rises by 3%. (Assume that the average number of suppliers and transactions per supplier stay constant.)
Accounting Information Systems
10th Edition
ISBN:9781337619202
Author:Hall, James A.
Publisher:Hall, James A.
Chapter15: Auditing It Controls Part Ii: Security And Access
Section: Chapter Questions
Problem 10P
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Transcribed Image Text:Cortex Business Solutions operates a trading partner network that allows firms to digitize their customer invoicing. Cortex focuses
exclusively on North American Oil & Gas firms, which it calls “buyers." When a buyer signs onto the network, all of its suppliers are
included in the network. Cortex generates recurring revenue primarily through a fee charged for each supplier invoice processed
through the network.
Sales are forecasted on the basis of transactions processed through the network, or "Billable Transactions." Thus,
Sales #Billable Transactions x Price.
=
Last year, the average price was $2.18 per transaction.
Billable transactions are modelled as follows:
Billable transactions = #Buyers x #Suppliers per Buyer x #Transactions
Where
#Buyers = the number of oil and gas companies using the network
#Suppliers per buyer = the average number of suppliers per buyer
#Transactions = the average number of transactions per buyer-supplier pair
Last year, there were 75 buyers on the network, each buyer had an average of 110 suppliers and the average supplier processed 553
invoices. Forecast sales for next year assuming that the number of buyers rises by 10% and the price per billable rises by 3%.
(Assume that the average number of suppliers and transactions per supplier stay constant.)
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