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Your company is evaluating the option of renting some of itscomputing services from a cloud provide. After many discussion,your company is considering renting only the accounting module.Your supervisor has asked you to develop, as soon as possible, ashort document about how this type of service is provided by acloud computing provider and the necessary steps that should betaken to implement this service.

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Deanna Hettinger
Deanna HettingerLv2
12 Dec 2019
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(ACCOUNTING INFORMATION SYSTEM)

Business scenario:

The model enterprise in this study is Euphoria Event Management Company (EEMC). As one of the major players in the event management industry, it provides a one-stop wedding service, organizes birthday parties, manages various kinds of celebrations and thus offers catering services based on the requirements of the customers. Due to this, the company handles multiple food inventory sales and purchases transactions and often slipped off the appropriate tracking and consumption of costs. Moreover, since it is classified as SME (small to medium-sized enterprise), it often fails to appreciate the importance of internal control in its daily operations.

The revenue cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) Sales executive receives customer order by phone, fax or from a meeting.

2) She forwards the customer order to the kitchen department with details on quantities of food inventory needed and the date of delivery to customer.

3) The kitchen supervisor issues a Sales Order or sometimes a Packing Slip for the food order. Using this document, EEMC delivers the goods to customer.

4) Upon receiving the food, customer stamps and signs the Sales Order/Packing Slip.

5) One month after the delivery date, the accounts clerk at EEMC bills the food with Sales Invoice (stamp-duty receipt with authorized signature). The customer takes the original invoice while the company gets the copy of invoice and stamped receipt generated by the customer.

6) Two month after the delivery date, the accounts clerk makes a courtesy call to customer on the payment due.

7) Customer makes payment either using a cheque/clearing deposit slip or via a bank transfer.

8) As evidence of payment, the accounts clerk requests the original payment document (receipts or cheque stub) from

the customer or just check the transaction from the bank statements.

9) The accounts clerk records the sales transaction and the amount of sales in the general ledger. She also keeps the revenue cycle related documents as proof of the transaction.

The expenditure cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) EEMC sets the budget for inventory purchase.

2) The Bill of Materials/Purchase Requisition document is created.

3) The procurement officer invites interested suppliers to quote their inventory price.

4) The procurement officer compares the quotation (price) of inventory among the various suppliers and appoints the

supplier who offers lowest price that commensurate with the desired quality of food. Appointment is usually conveyed by phone or fax.

5) When the food inventory arrives at the warehouse, the accounts clerk checks the quantity and the quality of inventory to confirm the order with the Bill of Materials.

6) Next, the supplier’s invoice (no Packing Slip from supplier, so the inventory is delivered with the invoice) is signed and the copy is taken and kept at the accounts department.

7) Between one to two weeks after the receipt of inventory, the accounts clerk confirms and pays for the purchases via a bank transfer. EEMC keeps the original receipt.

8) The accounts clerk records the purchase transaction and the amounts of obligation paid in the general ledger. She also keeps the expenditure cycle related documents as proof of the transaction.

Instructions:

Using the above information on EEMC operation and your knowledge on systems documentation techniques , draw the possible data flow diagrams to explain the revenue cycle and expenditure cycle.

2. Analyse and identify potential weaknesses in the current revenue and expenditure cycle implemented by the company.

3. Evaluate and comment on the internal control system related to the revenue cycle and expenditure cycle of the company. For each of the cycle, your answers must relate to the organizational control, documentation control and management practice control.

4. Using your own knowledge and creativity, suggest at least 3 ways to strengthen the documentation process and procedures using only the limited information given above.

5. Provide specific recommendations on how to overcome the discovered potential weaknesses on the organizational structure and authority of the company.

In this case, management needs assistance in evaluating andclassifying costs identified within Glaser Health Products in orderto implement an activity-based costing system. Please addressQuestions 1 through 6 at the end of the case. Based on the casequestions, you are required to provide a two to four double-spacedwritten report providing management with the necessary guidance inimplementing an activity-based costing system. The written reportshould be properly formatted according to APA guidelines anddemonstrate research and critical thinking skills. Explanations andrecommendations should be supported by at least 3 scholarly sourcesfrom the Ashford Library or other external sources, excluding thetextbook.

For Questions 1 through 3, create a chart to classify andidentify a cost driver for each of the costs provided in the text.The chart should be included as an appendix to the written report.Explanations of the classifications and identifications within thechart should be included within the written report, supported byreferences to the appendix.

Questions 4 through 6 should be addressed in fully developedexplanations/instructions as part of your written report. Thewritten analysis should be supported by at least three scholarlysources, excluding the textbook.

CASE 5A -- GLASER HEALTH PRODUCT​:

Glaser Health Products of Ranier Falls, Georgia, is organizedfunctionally into three divisions: Operations, Sales, andAdministrative. Purchasing, receiving, materials and productioncontrol, manufacturing, factory personnel, inventory stores, andshipping activities are under the control of the vice-president foroperations, George Gottlieb. Advertising, market research, andsales are the responsibility of the vicepresident for sales, JakeBogan. Accounting, budgeting, the firm's computer center, andgeneral office management are delegated to the corporate controller(Administrative), Charlie Kaplan. The following cost categories arefound in the company as a whole:

(a) Depreciation on factory equipment.

(b) Depreciation on office equipment.

(c) Depreciation on factory building.

(d) Advertising manager's salary.

(e) Assembly foreman's salary.

(f) Salespersons' salaries.

(g) Salespersons' travel expenses.

(h) Supplies for the Machining Department.

(i) Advertising supplies used.

(j) Electricity for the Assembly Department.

(k) Lost materials (scrap) in a MachiningDepartment.

(l) Direct labor in the Assembly Department.

(m) Supplies for the sales office.

(n) Sales commissions.

(o) Packing supplies.

(p) Cost of hiring new employees.

(q) Payroll fringe benefits for workers in theShipping Department.

(r) Supplies for Production Scheduling.

(s) Cost of repairing parts improperly manufacturedin the Machining Department.

(t) Paint for the Assembly Department.

(u) Heat, light, and power for the factory.

(v) Leasing of computer equipment for the AccountingDepartment.


Required:

1. Identify each of the costs with the appropriate division:Operations, Sales, Administrative.

2. Identify each of the costs with one of thefollowing: (a) Unit-levelactivities. (c) Product-levelactivities. (b) Batch-levelactivities. (d) Facility-level activities. Organize theseclassifications by division: Operations, Sales, Administrative.

3. Specify an appropriate cost driver for tracing costsassociated with the various levels of activities to the next costobjective or products, whichever is appropriate.

4. Glaser Health Products is interested in using activity-basedcosting to identify as many costs as possible with the products.These costs will be used for planning and control decisions ratherthan for inventory valuation. The controller decided that alloperation costs will be related to products but only those salesand administrative costs that are classified as unit-level,batch-level, or product-level costs
should be related to products. Using preliminary stage costdrivers, explain how individual items of costs will be traced toactivity groupings.

5. Using primary stage cost drivers, show how the costs shouldbe related to products.

6. Explain why it is necessary to use preliminary stage andprimary stage cost drivers.

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