Scenario Information

BeGood Baking Supply is a small bakery supply company formed as a   closely held corporation. The company supplies raw baking materials,   paper goods, and equipment to restaurants and bakeries in three states   in the upper mid-west. Most of its business, however, is located in a   large metropolitan area. BeGood wants to increase its presence in the   region and serve five states. In fact, the owners of BeGood would like   75% of their business to come from throughout the region rather than  the  current metropolitan area. In order to do this, the owners  understand  they must diversify offerings and lines of business.

Currently, BeGood has a phone center where customer orders are taken;   these orders are then sent to shipping where the order is filled in  its  large warehouse and shipped within four days. BeGood outsources its   shipping to a local trucking company. Once the order ships, all   paperwork goes to the accounting department where it is entered into  the  accounting system. BeGood still uses the same accounting system it  has  used since the inception of the company. All aging of receivables  and  other analysis is done using Excel spreadsheets. Purchasing and  tracking  of inventory are done solely by the warehouse manager.  Invoices for  inventory purchasing are sent to the accounting department  when goods  are received.

The owners at BeGood are wondering how they can utilize an online   presence and further automate its systems in order to facilitate its   growth and diversify its business. The owners may also like to expand   into the retail business.

You have been hired as a full-time staff accountant at BeGood Baking   Supply and have been given the task of evaluating and recommending a   viable accounting information system for the accounting and financial   data of BeGood in order to facilitate expansion and diversification. As   you begin your research, you realize that many departments are  involved  in the information system, and communication is key.

BeGood Baking Supply is considering adding an automated ordering   module to their current AIS system. As the accountant pushing for this   change, you are in charge of the analysis and presentation of the   information and recommendation for the new system. In performing the   analysis for your presentation, you have identified two possible  modules  that will fill the needs of the company. Both modules return a  positive  NPV.

Module Vendor                 A              B   

Useful Life                     5 years   5 years   

Acquisition Cost            300,000  250,000   

Yearly Operating Costs 95,000    100,000  

Yearly Benefits              205,000  150,000   

Cost of Capital                 10%       10%   

Payback                       1.5 years  2.5 years     

Instructions

Your task is to present to management a proposal outlining your   analysis and recommendation of which system to purchase. Write a   proposal to management outlining the decision-making process and the   system you recommend. Include in your proposal:

1. The steps necessary in evaluating and recommending an AIS module.   Note: these are the steps you would take to educate yourself on the   need for a new model, the options available, and the choice of the best   module.
2. List of needs BeGood has with respect to this automated ordering module. Include present needs as well growth needs
3. List of criteria you used in choosing a module. Include financial   criteria, expansion and growth criteria, and current needs. Be sure to   address internal control and audit needs.