JB Brothers is a home appliance retailer. JB owns one retail store in St. Louis and one in Kansas City. The company also owns three warehouses in St. Louis and one warehouse in Kansas City. JB is losing sales due to order fulfillment problems.
You have been hired as a consultant to investigate and report back to the CFO on the problem. You discover that sales are entered into cash registers manually in the retail stores. All inventory updates are manually entered into the system. You notice that to reduce customer wait time when the stores are busy, the cashiers sometimes set aside the inventory updates to enter them later.
Jeff Bume, director of inventory and purchasing management, complains to you that he is coming under increasing pressure from the chief operations officer about problems with stock outs and inability to fill customer orders quickly. An increasing number of customers are canceling orders and then placing the order with a competitor who can deliver faster.
Use the PIECES framework to analyze JB Brothers’ problem. What is the effect of this problem on JB Brothers’ accounting. Write a brief summary of your analysis to send to the CFO. Make assumptions as required, and include your assumptions in your response.
Is the ABC methodology the best fit for developing accounting systems?
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