Concept explainers
TM Office Supplies, Inc., is a wholesale distributor of office supplies. It sells pencils and pens, paper goods (including computer paper and forms), staplers, calendars, and other items, excluding furniture and other major items such as copy machines that you would expect to find in an office. Sales have been growing at 5 percent per year during the past several years. Mr. Marina, the president of TM Office Supplies, recently attended a national office supplies convention. In conversations during that convention, he discovered that sales for TM Office Supplies’ competitors have been growing at 15 percent per year. Arriving back home, he did a quick investigation and discovered the following:
- TM Office Supplies’ customer turnover is significantly higher than the industry average.
- TM Office Supplies’ vendor turnover is significantly lower than the industry average.
- The new market analysis system was supposed to be ready two years ago but has been delayed for more than one year in systems development.
- A staff position, reporting to the president, for a person to prepare and analyze cash budgets was created two years ago but has never been filled.
Mr. Marina has called on you to conduct a systems survey of this situation. You are to assume that a request for systems development has been prepared and approved. The information system at TM Office Supplies is much like that depicted in Chapters 10 through 16.
Make and describe all assumptions that you believe are necessary to solve any of the following:
- a. What are the specific tasks of this systems survey?
- b. Indicate specific quantifiable benefits and costs that should be examined in assessing the economic feasibility of any solutions that might be proposed. Explain how you would go about quantifying each benefit or cost.
- c. Propose and explain three different scopes for the systems analysis. Use a context diagram to describe each scope alternative. Hint: What subsystems might be involved in an analysis?
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Chapter 17 Solutions
Accounting Information Systems
- Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?arrow_forwardSarah Welch was hired 15 years ago by Produce-R-Us, an importer of rare and exotic fruits. ProduceR-Us was started by an immigrant family 20 years ago and has grown to a national company with sales of $10 million annually. Although the business has grown, the family-owned business strives to maintain a “family atmosphere” and stresses trust. Because of Sarah’s honesty and hard work, the manager quickly promoted her, and she now signs checks for amounts under $5,000 and also has responsibilities for Accounts Payable. Now, however, the owners are suspicious of Sarah’s recent lifestyle changes and have hired you to determine whether Sarah is embezzling from the company. Public records reveal the following:Perform a net worth calculation using the data above.arrow_forwardRae Philippe was a warehouse manager for Atkins Oilfield Supply, a business that operated across eight Western states. She was an old pro and had known most of the other warehouse managers for many years. Around December each year, auditors would come to do a physical count of the inventory at each warehouse. Recently, Rae’s brother started his own drilling company and persuaded Rae to “loan” him 80 joints of 5-inch drill pipe to use for his first well. He promised to have it back to Rae by December, but the well-encountered problems and the pipe were still in the ground. Rae knew the auditors were on the way, so she called her friend Andy, who ran another Atkins warehouse. “Send me over 80 joints of 5-inch pipe tomorrow, and I’ll get them back to you ASAP,” said Rae. When the auditors came, all the pipe on the books was accounted for, and they filed a “no-exception” report. Requirements Is there anything the company or the auditors could do in the future to detect this kind of…arrow_forward
- After working for years as a regional manager for a retail organization, Scott Parry opened his own business with Susan Gonzalez, one of his district managers, as his partner. They formed Scott and Susan (S&S) to sell appliances and consumer electronics. S&S pursued a “clicks and bricks” strategy by renting a building in a busy part of to`wn and adding an electronic storefront. S&S invested enough money to see them through the first six months. They will hire 15 employees within the next two weeks – three to stock the shelves, four sales representatives, six checkout clerks, and two to develop and maintain the electronic storefront. S&S will host its grand opening in five weeks. To meet that deadline, they have to address the following important issues: 17. What decisions do they need to make to be successful and profitable? 18. What information do S&S need to make those decisions?arrow_forwardRyan Egan and Jack Moody are both cash register clerks for Organic Markets. Lee Sorrell is the store manager for Organic Markets. The following is an excerpt of a conversation between Ryan and Jack: Ryan: Jack, how long have you been working for Organic Markets? Jack: Almost five years this November. You just started two weeks ago … right? Ryan: Yes. Do you mind if I ask you a question? Jack: No, go ahead. Ryan: What I want to know is, have they always had this rule that if your cash register is short at the end of the day, you have to make up the shortage out of your own pocket? Jack: Yes, as long as I’ve been working here. Ryan: Well, it’s the pits. Last week I had to pay in almost $40. Jack: It’s not that big a deal. I just make sure that I’m not short at the end of the day. Ryan: How do you do that? Jack: I just shortchange a few customers early in the day. There are a few jerks that deserve it anyway. Most of the time, their attention is elsewhere and they don’t think to check…arrow_forwardOdle Company manufactures a popular brand of cat repellant known as Cat-B-Gone, which it sells in gallon-size bottles with a spray attachment. The majority of Odie's business comes from orders placed by homeowners who are trying to keep neighborhood cats out of their yards. Odie's operating information for the first six months of the year follows: Month January February March April May June Number of Bottles Sold 1,000 1,100 1,300 2,000 2,400 3,000 Operating Cost $ 8,000 7,700 9,900 14,000 17,250 20,000 Required: 3. Using the high-low method, calculate Odie's total fixed operating costs and variable operating cost per bottle. 4. Perform a least-squares regression analysis on Odie's data. 5. Determine how well this regression analysis explains the data. 6. Using the regression output, create a linear equation (y a+ bx) for estimating Odie's operating costs.arrow_forward
- Heavenly Chocolates manufactures and sells quality chocolate products at its plant and retail store located in Saratoga Springs, New York. Two years ago, the company developed a web site and began selling its products over the Internet. Web-site sales have exceeded the company’s expectations, and management is now considering strategies to increase sales even further. To learn more about the web-site customers, a sample of 50 Heavenly Chocolate transactions was selected from the previous month’s sales. Data showing the day of the week each transaction was made, the type of browser the customer used, the time spent on the web site, the number of web pages viewed, and the amount spent by each of the 50 customers are contained in the file named Heavenly Chocolates. A portion of the data is shown in the table that follows: Heavenly Chocolates would like to use the sample data to determine whether online shoppers who spend more time and view more pages also spend more money during their visit to the web site. The company would also like to investigate the effect that the day of the week and the type of browser have on sales. Managerial Report Use the methods of descriptive statistics to learn about the customers who visit the Heavenly Chocolates web site. Include the following in your report. Graphical and numerical summaries for the length of time the shopper spends on the web site, the number of pages viewed, and the mean amount spent per transaction. Discuss what you learn about Heavenly Chocolates’ online shoppers from these numerical summaries. Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. Discuss the observations you can make about Heavenly Chocolates’ business based on the day of the week? Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each type of browser. Discuss the observations you can make about Heavenly Chocolates’ business based on the type of browser? Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the dollar amount spent. Use the horizontal axis for the time spent on the web site. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the number of web pages viewed and the amount spent. Use the horizontal axis for the number of web pages viewed. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the number of pages viewed. Use the horizontal axis to represent the number of pages viewed. Discuss your findings.arrow_forwardThe Irwin Batting Company manufactures wood baseball bats. Irwin's two primary products are a youth bat, designed for children and young teens, and an adult bat, designed for high school and college-aged players. Irwin sells the bats to sporting goods stores and all sales are on account. The youth bat sells for $45; the adult bat sells for $50. Irwin's highest sales volume is in the first three months of the year as retailers prepare for the spring baseball season. Irwin's balance sheet for December 31, 2024, and other data for the first quarter of 2025 follow: Requirements: 1. Prepare Irwin's sales budget for the first quarter of 2025. 2. Prepare Irwin's production budget for the first quarter of 2025. 3. Prepare Irwin's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of 2025. Round the predetermined overhead allocation rate to two decimal places. The overhead allocation base is direct labor…arrow_forwardJerry is a personnel manager for a large retail department store. He justreceived a memo stating that the company will build three new stores inPhoenix over the next 5 years, with one store opening in 24 months, oneopening in 36 months, and one opening in 60 months. The memo thatJerry received relates to what type of business plan? If Jerry is directedto develop a personnel plan for Phoenix, what type of planning will Jerrybe doing?arrow_forward
- ZPM is a listed limited liability company with a year end of June 30. ZPM’s main activity is selling home improvement of Do-It-Yourself (DIY) products to the public. Products sold range from nails, pain and tools to doors and showers: some stores also sell garden tools and furniture. Products are purchased from approximately 200 different suppliers. ZPM has 103 stores in eight different countries. ZPM has a well-staffed internal audit department, who report on regular basis to the audit committee. Areas where internal and external may carry out work include: Attending year-end inventory count in 30 stores. All are visited rotationally. Checking the internal controls over the procurement systems. Required; For each of the above two areas, discuss; The objectives of the internal auditor; The objectives of the external auditor; and Whether the external auditor will rely on the internal auditor, and if reliance is required, the extent of that reliance.arrow_forwardAs the bakery manager at the local grocery store, William monitored the mix of products most popular with consumers. Just two years earlier, this store sold eight loaves of bread for each package of buns sold. Today, the ratio is closer to six to one, bread to buns. William isn't sure why tastes or buying behavior have changed, but it's significant, so his purchasing behavior has changed accordingly. For the year just ended, the bakery department budgeted for sales of 9,460 loaves of bread and 1,540 packages of buns. Actual sales were 8,900 loaves of bread and 1,100 packages of buns. Budgeted selling price and variable cost per unit for each were as follows. Bread Budgeted selling price Budgeted variable cost 0.60 Budgeted contribution margin $1.40 (a1) $2.00 Your answer is partially correct. Sales price variance $ Buns $2.80 This year, the bread actually sold for $2.07 per loaf, while the package of buns sold for $2.91. 1.00 $1.80 Determine the bakery's sales price variance this year,…arrow_forwardAs the bakery manager at the local grocery store, Donald monitored the mix of products most popular with consumers. Just two years earlier, this store sold eight loaves of bread for each package of buns sold. Today, the ratio is closer to six to one, bread to buns. Donald isn't sure why tastes or buying behavior have changed, but it's significant, so his purchasing behavior has changed accordingly. For the year just ended, the bakery department budgeted for sales of 10,200 loaves of bread and 1,800 packages of buns. Actual sales were 9,900 loaves of bread and 1,100 packages of buns. Budgeted selling price and variable cost per unit for each were as follows. Bread Buns Budgeted selling price $2.00 $2.80 Budgeted variable cost 0.60 1.00 Budgeted contribution margin $1.40 $1.80 This year, the bread actually sold for $2.07 per loaf, while the package of buns sold for $2.92. (a1) (b1) Determine the sales mix and sales quantity variances for the bakery this period, specifying the amount and…arrow_forward
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