Online order system cost-benefit analysis (Learning Objective 5)
Union Gas wants to move its sales order system online. Under the proposed system, gas stations and other merchants will use a secure site to check the availability and current price of various products and place an order. Currently, customer service representatives take dealers’ orders over the phone; they record the information on a paper form, then manually enter it into the firm’s computer system.
CFO Kate Bronson believes that dealers will not adopt the new online system unless Union Gas provides financial assistance to help them purchase or upgrade their computer network. Bronson estimates this one-time cost at $765,000. Union Gas will also have to invest $150,000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be $240,000. The online system will enable Union Gas to eliminate 25 clerical positions. Bronson estimates that the new system’s lower labor costs will have saved the company $1,370,000.
Requirements
Use a cost-benefit analysis to recommend to Bronson whether Union Gas should proceed with the online ordering system. Give your reasons, showing supporting calculations.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
Managerial Accounting (5th Edition)
- You are the floor manager of Channel and have read the following learning outcomes: “Purchase Returns and Allowances”, “Customer Refunds and Allowances”, and “Merchandise Returns” (pg 149 – 155). As the manager, briefly explain the difference between Purchase Returns and Allowances and Merchandise Returns. Customer Refunds and Customer Allowances.arrow_forward1. Explain which of the conversion methods would be suitable for the following. Justify your choice: Upgrading the software for an Automatic Banking Machine (ABM/ATM) Adding a new inventory system along with new computerized cash registers in a supermarket Implementing a student course management system in a university 2. List four reasons why your participation as a user of an information system is critical during the systems development life cycle, linking the concepts of user involvement and change management in a software implementation project. 3. Why is it so important to understand how a business process works when trying to develop a new information system? TASK B: In the context of the impact of a change on an organization, How would you characterize the following changes? Adding electronic scoreboards to a cricket grounds. A Telco consolidating call centres in one country. A Telco installing fibre-to-the-home to replace copper wires. A Telco launching a TV service.arrow_forward1. Explain how the organizations culture would influence the design of a new Accounting Information system for a company. 2. An university has various schools and departments that offer various Degree and Diploma courses. The University has been offering courses through two modes of study that include the Full-Time classes and Evening Classes. The university management has been evaluating the possibility of introducing a new mode of study where the university will offer the students the option of selecting 100% online classes option. The University will deploy this 100% online classes option by using Zoom video conferencing software. Other software’s and platforms that the university will use for the 100% online classes mode like google classroom and other softwares. The university has invited you as an expert of accounting information systems to help in the design and implementation of a new revenue transaction cycle system that will be used for the new 100% online classes option mode…arrow_forward
- Social Media, Inc. (SMI) has two services for users. To ot!, which connects tuters with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 13,100 20,100 33,200 Revenues $ 1,800,000 $ 1,760,000 $ 3,560,000 Engineering hours 9,300 7,300 16,600 Engineering cost $ 687,750 $ 806,250 $ 1,494,000 Administrative costs $ 1,195,200 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of users to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?arrow_forwardABC bank offers a Business Grant to encourage a fresh graduate to become an entrepreneur. However, to apply this Business Grant, you need to explain in general the overview of your business. Therefore, using the Business Model Canvas approach, develop your strategy to run ANY BUSINESS IDEA by illustrating Business Model Canvas based on NINE (9) areas, including customer segment, value proposition, marketing channels, customer relationships, key partners, key activities, key resources, cost structure, and revenue stream.arrow_forwardYou wish to take an Excel course. You may enroll at one within your school or you may take a community class at the local library. You've gathered the following information to aid in your decision-making process: Costs/Benefits College Course Community Course Cost $4,300 $1,190 Distance to course 0.20 miles (walking distance) 18 miles (driving distance) Timing of course Weekday Weekend Number of meetings 16 8 Qualitative considerations Convenience, quality of instruction Flexibility, brief duration Pretend transportation (gas, mileage, and parking) cost $220 per class session at the library. If you consider solely the cost - including transportation - of each alternative, which would you choose? Multiple Choice College course Community course Both alternatives Neither alternativearrow_forward
- Learning Task 2 Problem: The Prospere Bookstore The Prospere Bookstore sells the books used in classed such as workbooks and coloring books. All the enrolled learners (150 learners) purchased the 3 prescribed books at P500 each. The books costs P200 each. Also, sales of various school supplies amounted to P500,000. Costs of these school supplies amounted to P250,000. The monthly salary of the bookstore manager is P20,000. The store is manned by one clerk with monthly salary of P6,000. Utilities expense for the year totals P80,000. Of this, 25% is for the small office at the back of the bookstore. Depreciation for store fixtures amounted to P50,000. Requirement: Prepare the multi-step income for the year ended December 31 for Prospere Bookstore.arrow_forwardA school purchasing manager is seeking to buy tablets from either Entity A or Entity B and will pay shipping costs. The purchase price is $500 each. Entity A purchases the tablets from the manufacturer, Banana Industries (for $400). Entity A has the tablets shipped to its distribution center in Denver, and then ships them to schools when a sale is made. Entity A at times offers discounts to schools in accordance with its marketing strategy. On the other hand, Entity B sells tablets from a variety of manufacturers including Banana Industries. When a sale is made, Entity B remits the proceeds to the manufacturer, and retains a 10% commission (here $50). Entity B has no discretion as to the sales price. The manufacturer then ship the equipment to the customer. For each arrangement, indicate how much revenue and gross profit should be recognized. Provide support for your answer from the ASC and cite the applicable provisions. You should cite like this: ASC 606-10-35-3(e) so we can find…arrow_forwardA college bookstore maintains all of its records on index cards. This has proven to be a very tedious chore, and the manager has asked you to design a database that will simplify this task. The index cards are preprinted and contain the following labels:Title:Author(s):Edition:Publisher:Publisher Address:Publisher Phone #:Cost of Text:Selling Price:Number on Hand:Professor:Class:Semester:Year:Professor Phone #:Using your understanding of the business rules that exist in most colleges and for most college bookstores, prepare the base tables (in third normal form) that will be required to translate the index card information into a working database for the bookstore.arrow_forward
- List the business, technological, and organizational challenges that were addressed throughout the project to implement a new learning management system, and explain the three-sphere model for systems management in your own words. Do not depend on the examples in the textbook.arrow_forwardSocial Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 12,500 19,600 32,100 Revenues $ 1,750,000 $ 1,460,000 $ 3,210,000 Engineering hours 12,200 8,200 20,400 Engineering cost $ 295,000 $ 415,000 $ 710,000 Administrative costs $ 1,123,500 Required: a. Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the revenue to allocate administrative costs. b. Based on the rates computed in requirement (a), what is the profit for each service?arrow_forwardSocial Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 15,500 22,100 37,600 Revenues $ 2,000,000 $ 2,080,000 $ 4,080,000 Engineering hours 10,400 8,400 18,800 Engineering cost $ 881,000 $ 999,000 $ 1,880,000 Administrative costs $ 1,504,000 The company is considering using a two-stage cost allocation system and wants to assess the effects on reported product profits. The company is considering using Engineering Hours and Users as the allocation base. Additional information follows. Toot! TiX Total Engineering hours 10,400 8,400 18,800 Users 15,500 22,100 37,600 Engineering-hour related administrative cost $ 199,280 User-related…arrow_forward
- Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,