Star Gas wants to move its sales order system online. Under the proposed system, gas stations and other merchants will use a secure site 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, then manually enter it into the firm's computer system.

Terrence revises her estimates of the benefits from the new system's lower labor costs. She now thinks the savings will be only $932,000.

CFO Maria Terrence believes that dealers will not adopt the new online system unless Star Gas provides financial assistance to help them purchase or upgrade their computer systems. Terrence estimates this one-time cost at

$750,000. Star Gas will also have to invest $145,000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing the system will be $215,000. The online system will enable Star Gas to eliminate 25 clerical positions. Terrence estimates that the benefits of the new system's lower labor costs will have saved the company $1,420,000.