Northern Gas wants to move its sales order system to the Web. Under the proposed system, gas stations and other merchants will use a Web browser and, after typing in a password for the Northern Gas webpage, will be able to check the availability and current price of various products and place an order. Currently, customer service representatives take dealers' orders over the phone; they record the information on a paper form, and then manually enter it into the firm's computer system.

CFO Carrie Smith believes that dealers will not adopt the new Web system unless Northern Gas provides financial assistance to help them purchase or upgrade their PCs. Smith estimates this one-time cost at. $770 000. Northern Gas will also have to invest $170 000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be. $ 250 000

The web system will enable Northern Gas to eliminate 25 clerical positions. Smith estimates that the new system's lower labour costs will save the company $1 365 000

Use a cost-benefit analysis to recommend to Smith whether Northern Gas should proceed with the web-based ordering system. Give your reasons, showing supporting calculations.

Expected benefits:

Expected Cost:

Net benefit (cost):

As CEO of , SEA SPRAY MARINE BARB Jackson 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 SEA 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 MILES COLE reports that the team and IDG estimate that if SEA SPRAY implements the ERP system, it will incur the following costs:

Costs of the Project

a. $390,000 in software costs

b. $97,000 to customize the ERP software and load 's SEA SPRAY'S data into the new ERP system

c. $130,000 for employee training

Benefits of the Project

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 $220,000

c. Integrating purchasing, production, marketing, and distribution into a single system will allow SEA SPRAY MARINE to reduce inventories, saving $250 000

d. Higher customer satisfaction should increase sales, which, in turn, should increase profits by $155,000

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?) (Leave unused cells blank.

a.estimating software cost

a.estimating software cost

b.estimating cost of loading data into the new ERP system

b.estimating cost of loading data into the new ERP system

c. customizes the ERP system

c. customizes the ERP system

d. estimate customization cost

d. estimate customization cost

e. estimate training cost

e. estimate training cost

f. saving from more efficient order processing

f. saving from more efficient order processing

g. saving from streamlining the manufacturing process

g. saving from streamlining the manufacturing process

h. evaluates the effects of integrating purchasing production, marketing and distribution into a single system

h. evaluates the effects of integrating purchasing production, marketing and distribution into a single system

i. estimate increase in sales from higher customer satisfaction

i. estimate increase in sales from higher customer satisfaction

j. estimate benefits and cost

j. estimate benefits and cost