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Accounting Information Sysytem

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Jessica, the financial manager at Chila restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She has accumulated the following data for the past 10 months:
Month Revenues Advertising Costs
March $150,000 $20,000
April 170,000 30,000
May 155,000 15,000
June 165,000 35,000
July 155,000 10,000
August 165,000 20,000
September 145,000 15,000
October 180,000 40,000
November 155,000 25,000
December 160,000 25,000

a. Use Excel's regression features to determine the regression line. What is the increase in revenues for each $1,000 spent on advertising? Use Excel's built-in function to determine the R-squared value for this regression line.

b. Use Excel's conditional formatting feature to place borders around all months with sales greater than $150,000.

c. Would you recommend that Chila continue advertising? Why or why not? Using Word and an appropriate memo format, write a short (1-2 paragraph) memo to Jessica summarizing your recommendation and the reasons for your recommendation. Grammar counts.

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Solution Preview

See the attached file.

Step 1: List the variables
Step 2. Do the regression
The following are the steps:
Click Data, Data Analysis, Choose Regression
The Y input range is the dependent variable which is Revenues
The X input range is the independent variable which is Advertising Costs

Regression Statistics
Multiple R 0.8017
R Square 0.6427
Adjusted R Square 0.5981
Standard Error 6,513.5253 ...

Solution Summary

The solution discusses an accounting information system.

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Accounting Information System Replacement

A publicly traded company needs to replace its accounting information system (AIS) within the next 18 months. The company has funding and resources to handle the replacement, so cost is not a concern. The company has several choices:

a. Purchase an off-the shelf accounting system from Oracle (PeopleSoft Enterprise Financial Management). Oracle will assist with the installation, configuration, and testing of the solution. Once the system is operational, the company's information systems group will maintain it.

b. Modify the existing AIS application (which is an in-house system developed and maintained by the company's information system group). It will have the same functions and features as the Oracle solution. The information system group will rely on consultants to assist in the development, configuration, and testing of the system. Once the system is operational, the company's information systems group will maintain it.

c. Hire an outside company (Oracle) to handle the installation, configuration, and maintenance of the AIS application (PeopleSoft Enterprise Financial Management). The solution will be outsourced completely. Users will be able to access the system which will be housed at a secured Oracle location. Little to no work will be required by the company's information systems group.

You have been asked by the company's CEO to make a recommendation as to which approach to take. In considering your recommendation, cost is not a concern. For each option, it is anticipated that it will take no more than 15 months to complete the work.

1. Analyze the need for changing to a new system and the potential benefits and risks associated with this change.

2. Identify three (3) advantages and three (3) disadvantages for each of the following choices:

a) Purchase the AIS from Oracle and have it maintained by the company's information systems group;

b) Modify the company's current AIS application and have it maintained by the company's information systems group; and

c) Outsource the AIS to Oracle and have Oracle maintain the system.

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