COST/BENEFIT ANALYSIS

A point-of-sale system will be installed at the Aftkings Restaurant to assist the servers. The system costs $32,000 to purchase and will require the acquisition of an additional parts-and-labor maintenance contract at the cost of $8,000 per year. Included in the system are five terminals, two printers, and a small central processor. The terminals will be used for two purposes: They will precheck an order for food when the server enters an order for food and beverage using the terminal keyboard. The order will be printed in the kitchen or at the beverage station and thus indicate what item should be prepared. During the precheck, the system will also preprice each item, using data contained in memory. This feature prevents errors in pricing, a problem that costs this busy restaurant at least $20,000 per year.

The terminals will also total patrons food and beverage purchases when they are ready to pay their bills. The amount of each check is tallied by the system throughout the day. The total tells management how much sales are for the day. The system also tallies the sales by the categories of food and beverage, by each menu item sold, and by each server.

This information is used by management to evaluate the salability of each menu item. It also permits the assessment of each servers sales and management will use it to determine how much money a server should turn in the past, cash shortages have averaged $300 per week.

The system will produce some expenses for supplies of paper and ink ribbons needed to print the reports and customer checks. The customer checks will be different from those now in use, but the cost will stay approximately the same.

The system will require approximately 2 hours a day of accounting time to audit it and compare cash received from servers versus the amount tallied. The accountants make $40,000/year.

To install the system, the restaurant will have to spend approximately $5,000 for electrical wiring and carpentry work.

1- identify the costs and benefits of this system and attach their dollar value on a per year basis

2- approximately when will the system break even and begin paying back to the company

3- is this system financially feasible from a payback analysis?

Upload a spreadsheet using the example on p. 100 as a model. DO NOT use NPV.

1. All totals should use formulas for the calculations

2. Include a line graph of cost and benefits that shows the break-even point.