As CEO of SeaSpray Marine, Bianca Saikaley knows it is important to control costs and to respond
Question:
A month later, management accountant Mike Cobalt reports that the team and IDG estimate that if SeaSpray Marine implements the ERP system, it will incur the following costs:
a. $350,000 in software costs
b. $80,000 to customize the ERP software and load SeaSpray’s data into the new ERP system
c. $125,000 for employee training The team estimates that the ERP system should provide several benefits:
a. More efficient order processing should lead to savings of $185,000.
b. Streamlining the manufacturing process so that it maps into the ERP system will create savings of $275,000.
c. Integrating purchasing, production, marketing, and distribution into a single system will allow SeaSpray Marine to reduce inventories, saving $220,000.
d. Higher customer satisfaction should increase sales, which, in turn, should increase profits by $150,000.
Requirements
1. If the ERP installation succeeds, what is the dollar amount of the benefits?
2. Should SeaSpray Marine install the ERP system? Why or why not? Show your calculations.
3. Why did Saikaley create a team to evaluate IDG’s proposal? Consider each piece of cost-benefit information that management accountant Cobalt reported. Which person on the team is most likely to have contributed each item?
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Managerial Accounting
ISBN: 978-0176223311
1st Canadian Edition
Authors: Karen Wilken Braun, Wendy Tietz, Walter Harrison, Rhonda Pyp
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