Question

* More Info Benefits of the Project a. More efficient order processing should lead to savings of $170,000. b. Streamlining the manufacturing process so that it maps into the ERP system will create savings of $245,000. c. Integrating purchasing, production, marketing, and distribution into a single system will allow OceanWorld to reduce inventories, saving $210,000. d. Higher customer satisfaction should increase sales, which in turn, should increase profits by $150,000. Print Done Requirement 3. Why did Wilson create a team to evaluate ABC's proposal? Consider each piece of cost-benefit information that management accountant Cook 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?) Wilson formed a team to evaluate the feasabilty of installing an ERP system for the following reasons. (If a box is not used in the table, leave the box empty, do not select a label.) * More Info Forming a team would lower the cost of evaluating the system. She did not want to have sole responsibility for the decision. The project was probably too big for one person. The representatives of different functional business areas have different knowledge and information to contribute. The representatives of different functional business areas have the same knowledge and will offer similar perspectives. Costs of the Project a. $400,000 in software costs b. $95,000 to customize the ERP software and load OceanWorld's data into the new ERP system C. $103,000 for employee training Print Done

Answer 1

Willson have created team to evaluate ABC's proposal since the representative of different knowledge and information to contribute.

Benefit of proposal :

- More efficient order processing should lead to saving of 170,000 : Order processing would result into saving when either same team can process more orders or less than existing team would be sufficient to process the orders of the company. Need to understand basis of this saving

- Streamlining the manufacturing process so that it maps into the ERP system will create saving of 245,000 : Integration of manufacturing process might lead to improve in efficiencies of production and reduction in wastage of resources, however one need to consider what is the base of the calculation

-Reduction of Inventory saving 210,000 : Reduction of inventory is definitely useful however reduction on inventory will not bring saving equal to reduction of inventory. The saving would be equivalent to interest on 210,000 and effort in management of inventory so this amount needs to be calculated properly

- Higher sales due to improved customer satisfaction, increase profit 150,000 : This might be good case however one need to understand how customer satisfaction would improved for ERP installation.

The total saving for option 1,2,4 works out to 565,000 against software cost of 400,000. The 95000 & 103000 is one time cost relating to system implementation hence the proposal may be proceeded provided appropriate validation of saving as discucsed above is carried out and appear proper