Accounting Information System Boston Manufacturing Company

Question: Discuss about theAccounting Information Systemfor Boston Manufacturing Company. Answer: Introduction In the twenty-first century, a huge evolution has taken place in the ways of carrying business. There was a time when all the business details were kept in manually. However, the introduction of compute has changed the whole scenario. Now-a-days, the use of Accounting Information System, commonly known as AIS, helps the businesses to keep all the business related records in an organized way (Hall 2012). This process contributes to the reduction of cost and provides better efficiency in the various business operations. The main objective of AIS is to provide all relevant information to the organizational people and to maximize the profitability of an organization (Christensen, Nikolaev and Wittenberg?Moerman 2016). Objectives This report is about the development of a computerized AIS system of the Boston Manufacturing Company. As per the provided case, the Boston Manufacturing Company has been witnessing a massive drop in the net income along with an increase in the cost of sales and operating cost. The major reason behind this downfall is the use of backdated manual AIS system (DRURY 2013). Thus, the owner of the company requires an improved AIS system. There are some objectives behind this demand. The primary objective is to maximize the sales by decreasing the various sales related costs. It is desired that the new AIS system will provide the information about the demand of the product, various market trends, competitors strategies and others. Another objective is the timely delivery of products to the customers in good condition (Prasad and Green 2015). One of the most important objectives is to provide the managers all necessary information so that they could be helpful in decision making process. Th e improved AIS system must be in the cost budget of the company (Collier 2015). These are the objectives behind the development of an improved AIS system for The Boston Manufacturing Company. Assumptions and Constraints Some assumptions have been made to go ahead with the problem. It has been assumed that The Boston Manufacturing Company has been keeping all the records manually; that is the business related records are kept in different exercise books in the form of writing (Alamin et al. 2015). On the other hand, there is an existence of some constraints while developing the improved information system. The first hindrance is the cost. The company has a limited budget of $2, 71, 000 for the purpose of AIS development. However, it has been assured that added costs will be provided by the company, but the amount will not be much. The implementation of new AIS system demands the knowledge of computer. It is assumed that all the employees do not have adequate knowledge about computers. Thus, this is a major problem. Another hindrance can be the mindset of the employees to accept the changes. Employees are not always ready to accept changes. These are the major assumptions and constraints of the plan ( Romney et al. 2013). Schedule for Requirements Setting up of a whole new AIS system is a complex process. There are various steps include from in the implementation process starting from analysis to giving live support to the system. There are certain requirements in the implementation process of AIS. They are requirements of personnel, requirements of cost and requirements of necessary equipments (Ismail and King 2014). These requirements are discussed in details below: The first requirement is the requirement of personnel or employees who would be responsible for the improvement and implementation of the AIS system of the company. There are various duties of these personnel like maintain the financial record and general ledgers; making of budget; providing administrative support; maintaining all kind of accounting information and others. They must have the knowledge of computers to run the AIS program, on the other hand, as AIS is an accounting software, it is mandatory that the employees have a minimum of bachelors degree in accountancy to know the various programs of AIS (Apostolou et al. 2014). The next requirement and the most important requirement is the requirement of money. The implementation of improved AIS system demands a lot of money. There are various costs involves like the cost of the employees salary, the cost of equipments and others. The company has allocated $ 2, 71, 000 for this purpose and they have promised more if necessary. The money has been divided into two parts. $ 1, 00, 000 is allocated for the employees; $ 1, 50, 000 has been allocated for the equipments and the rest is for the other purposes. The third requirement is the equipments. Equipments refer to the computers, routers, cables and others. These are the equipments for establishing the AIS system in the company. Hence, the Boston Manufacturing Company needs to take care all these requirements carefully. Cost Benefit Studies According to Ferwerda (2014), Cost-Benefit Studies or Cost-Benefit Analysis (CBA) refers to ascertain the benefit of a course of action and then to compare it with the costs. In case of The Boston Manufacturing Company, there are three motives for the CBA. The first motive is to take decision on the development of AIS system. The second motive is to evaluate the development plan of AIS. The third motive is to ascertain whether the development plan will be beneficial for the company or not. As per the study, the estimated cost of the development plan is $ 2, 71, 000. On the other hand, as per the company, The Boston Manufacturing Company will be able to generate estimated revenue of $ 1, 64, 000 each year. As the development of improved AIS system is a capital investment, the investment money can be got back within a period of two years. Findings The findings of the report are discussed under: In todays business world, it is essential for the companies to keep pace with the change. Thus, it is essential to implement the computerized AIS system for the smooth running of the business. AIS helps to maximize the profitability of a company by minimizing the costs associated with that. There should be some basic objectives behind the implementation of the improved AIS system in a company. In case of The Boston Manufacturing Company, the objectives are growth of sales, minimization of various costs, develop efficient customer service, provide information about the market trend, provide information about the competitors and provide correct information to the manager to help in decision making process. There are some basic requirements for the implementation of AIS system. They are the personnel having proper computer and accounting knowledge, computers and hardware and the most important money as money is the most crucial factor for this purpose. Recommendation and Conclusion As per the above study, there are various aspects in the development of an improved AIS system in an organization. First of all, one must identify the needs for the AIS system. After that, the costs are estimated and then the implementation process takes place. In case of The Boston Manufacturing Company, there are various reasons which support their decision to skip to a computerized AIS system from a manual one. Afternthe analysis above, it is recommended that they should adopt the plan and start working the development process. The main logic which supports the decision is the cost benefit. Development of AIS is a capital expenses which is a onetime investment. The estimated cost is $ 2, 71, 000. This investment can be returned back within a time span of two year as the yearly estimated revenue is $ 1, 64, 000. Thus two year revenue is $ 3, 28, 000 ($ 1, 64, 000*2) which exceeds the cost of implementation. On the other hand, other problems like customer service, growth in sales, c ost minimization and others will be solved. Hence, the development of improved AIS for The Boston Manufacturing Company is highly recommended. References Alamin, A., Yeoh, W., Warren, M. and Salzman, S., 2015, January. 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