Your task is to present to management a proposal outlining your analysis and recommendation of which system to purchase.
BeGood Baking Supply is a small bakery supply company formed as a closely held corporation. The company supplies raw baking materials, paper goods, and equipment to restaurants and bakeries in three states in the upper mid-west. Most of its business, however, is located in a large metropolitan area. BeGood wants to increase its presence in the region and serve five states. In fact, the owners of BeGood would like 75% of their business to come from throughout the region rather than the current metropolitan area. In order to do this, the owners understand they must diversify offerings and lines of business.
Currently, BeGood has a phone center where customer orders are taken; these orders are then sent to shipping where the order is filled in its large warehouse and shipped within four days. BeGood outsources its shipping to a local trucking company. Once the order ships, all paperwork goes to the accounting department where it is entered into the accounting system. BeGood still uses the same accounting system it has used since the inception of the company. All aging of receivables and other analysis is done using Excel spreadsheets. Purchasing and tracking of inventory are done solely by the warehouse manager. Invoices for inventory purchasing are sent to the accounting department when goods are received.
The owners at BeGood are wondering how they can utilize an online presence and further automate its systems in order to facilitate its growth and diversify its business. The owners may also like to expand into the retail business.
You have been hired as a full-time staff accountant at BeGood Baking Supply and have been given the task of evaluating and recommending a viable accounting information system for the accounting and financial data of BeGood in order to facilitate expansion and diversification. As you begin your research, you realize that many departments are involved in the information system, and communication is key.
BeGood Baking Supply is considering adding an automated ordering module to their current AIS system. As the accountant pushing for this change, you are in charge of the analysis and presentation of the information and recommendation for the new system. In performing the analysis for your presentation, you have identified two possible modules that will fill the needs of the company. Both modules return a positive NPV.
Module Vendor
Useful Life
A – 5 years B – 5 years
Acquisition Cost
A – 300,000 B – 250,000
Yearly Operating Costs
A – 95,000 B – 100,000
Yearly Benefits
A – 205,000 B – 150,000
Cost of Capital
A – 10% B – 10%
Payback
A – 1.5 years B – 2.5 years
INSTRUCTIONS
Your task is to present to management a proposal outlining your analysis and recommendation of which system to purchase. Write a proposal to management outlining the decision-making process and the system you recommend. Include in your proposal:
The steps necessary in evaluating and recommending an AIS module. Note: these are the steps you would take to educate yourself on the need for a new model, the options available, and the choice of the best module.
List of needs BeGood has with respect to this automated ordering module. Include present needs as well growth needs
List of criteria you used in choosing a module. Include financial criteria, expansion and growth criteria, and current needs. Be sure to address internal control and audit needs.
The order of the essay goes by the proposal, Evaluation, Needs, criteria, and conclusion which i had post up already.
Proposal is the overview: problem, plan how to approach it, and describe the proposal relating to BeGoods.
Evaluation and recommend Accounting informative system: the sys life cycle, to plan and recommend accounting sys areas that needs to be met. Connect it to BeGoods.
Needs of an automated component: These are the big points to hit. my professor mention the sys if you are creating has to communicate to the division/department together that can address a situation. Make sure it ties with BeGood. All of the big points must ties with BeGoods.
Criteria used in decision: All related back to BeGoods. We must have the module A&B presented in the essay and select which we must recommend by their NPV. But professor stated to be don’t base the recommendation by cash flow every year. It may not be the yearly cash flow but how much it cost to acquire it, capital, NPV, and pay back period.
There needs to be more internal controls involve the control environment, control activities, monitoring activities, risk assessment, and information and communication and a thorough discussion of the financial information related to both modules (NPV, payback period, etc.)
Here is a essay i wrote about control you can get an idea of..
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