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)
- Case scenario: You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month. SEE ATTACHED for Numbers Find the inventory total cost and weighted average cost for the month, i.e., all of the records of data. Enter values for the next eight rows, Row 3 through 10, in the table below. Do…arrow_forwardIdentify 2 advantages and 2 disadvantages for each for the measures below implemented by the retailers during the outbreak of covid-19. i. Live streaming can help retailers facilitate a “see now, buy now” culture, which enables them to instantly inform consumers about their products and create an urge to purchase. ii. improvement of online ordering and delivery services.arrow_forwardassume that you are planning to purchase a new laptop for school, work, and home use. go to the website of two computer manufacturers and make a selection. complete the following items and questions. compare the following items for your selections in their financial statements. revenues for products, revenues for services, cost of goods sold, accounts receivable, inventories, accounts payable, and research ad development. what are some factors that can impact the gross profit of a merchandise company? one item that can help investors understand the relationship between net sales and net profits is the gross profit rates. find the financial information needed to calculate the gross profit rate for your two selected companies.arrow_forward
- Provide a rationale for the expense based on the given problem. Also, explain what is rationale since it's unfamiliar to me.arrow_forwardSaurez Company, your client, manufactures paint. The company’s president, Maria Saurez, has decided to open a retail store to sell Saurez paint as well as wallpaper and other supplies that would be purchased from other suppliers. She has asked you for information about the conventional retail method of pricing inventories at the retail store. Instructions Prepare a report to the president explaining the retail method of pricing inventories. Your report should include the following points. a. Description and accounting features of the method. b. The conditions that may distort the results under the method. c. A comparison of the advantages of using the retail method with those of using cost methods of inventory pricing. d. The accounting theory underlying the treatment of net markdowns and net markups under the method.arrow_forwardCan you do the decision tree?arrow_forward
- Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.arrow_forward8 https://www.linkedin.com/learning/exams/summative/courses/accounting-foundations-2018 NG What is the best way for a small hardware store to compete against Home Depot, when Home Depot can charge less for the same products? Select an answer: Focus on customer service, and create relationships. Try to convince Home Depot to close its store. Buy cheaper, inferior products. Try to find suppliers who will charge less for their products. Skip Previous e to searcharrow_forwardPizzaRush, which is located in the general Los Angeles area, fares very wellwith its competition in offering fast delivery. Many students at the area universities and community colleges work part-time delivering orders made via the web at PizzaRush.com. The owner, a software engineering graduate of USC, plans to purchase and install five portable, in-car systems to increase delivery speed and accuracy. The systems provide a link between the web order-placement software and the in-car GPS system for satellite-generated directions to any address in the Los Angeles area. The expected result is faster, friendlier service to customers, and more income for PizzaRush.Each system costs $4600, has a 5-year useful life, and may be salvaged foran estimated $300. Total operating cost for all systems is $650 for the first year, increasing by $50 per year thereafter. The MARR is 10% per year. Perform an annual worth evaluation that answers the following questions:a. How much new annual revenue is…arrow_forward
- A 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_forwardAnalyse the system requirement for accounting software for the retail sector. Critically discuss the benefit and possible issues for the proposed system. Give recommendation with reasons to support your selection. Description of the system requirements for accounting software in retail sector. Discussion on the benefit of in-house development for proposed accounting software. Discussion on possible issues of in-house development for proposed accounting software. Recommendation to overcome the possible issues of in-house development for proposed accounting software. Please donot provide solution in image format and it should be in step by step format and provide solution asaparrow_forwardnteract Systems, Inc. has developed software tools that help hotel chains solve application integration problems. Interact’s Application Integration Server (AIS) provides a two-way interface between central reservations systems (CRS) and property management systems (PMS). At least two important trends in the hotel industry are relevant. First, hotels are shifting away from the manual booking of room reservations and electronic bookings will continue to increase as more bookings are made over the Internet. Second, competitive pressures are forcing hotels to implement yield management programs and to increase customer service. By integrating the CRS and PMS through Interact’s AIS, inventories can be better managed, yields improved, and customer service enhanced. All reservation traffic is routed from the CRS to individual hotel properties. This allows Interact Systems to create a database that can be used to track customers and to facilitate marketing programs, such as frequent…arrow_forward
- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningEssentials Of Business AnalyticsStatisticsISBN:9781285187273Author:Camm, Jeff.Publisher:Cengage Learning,Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L
- Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,