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As CEO of Water spray marine Rylan Westbrook, knows it is important to control costs and to respond quickly to changes in the highly competitive

As CEO of Water spray marine Rylan Westbrook, knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When IDG Consulting proposes that Water spray marine invest in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant.

A month later, management accountant Matt Cullen reports that the team and IDG estimate that if Water spray marine implements the ERP system, it will incur the following costs:

Costs of the Project

a. $36 0000 in software costs

b. $83 000 to customize the ERP software and load 's Water spray data into the new ERP system

c. $150 000 for employee training

Benefits of the Project

a. More efficient order processing should lead to savings of $200 000

b. Streamlining the manufacturing process so that it maps into the ERP system will create savings of $280 000

c. Integrating purchasing, production, marketing, and distribution into a single system will allow Water spray marine to reduce inventories, saving $255 000

d. Higher customer satisfaction should increase sales, which, in turn, should increase profits by $185 000

Requirements

1.If the ERP installation succeeds, what is the dollar amount of the benefits?

2.Should Water spray marine install the ERP system? Why or why not? Show your calculations.

3.Why did Westbrook create a team to evaluate IDG's proposal? Consider each piece of cost-benefit information that management accountant Cullen reported. Which person on the team is most likely to have contributed each item? (Hint: Which team member is likely to have the most information about each cost or benefit?)

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