Last year, your company purchased a site license to the accounting software suite CookTheBooks® for $10,000....
Last year, your company purchased a site license to the accounting software suite CookTheBooks® for $10,000. Yesterday, your IT department discovered that the software erroneously calculates 2 + 2 = 5 and suggested purchasing a replacement software, BeanCounter®, for $15,000. How should your company assess or quantify the cost of the decision to replace its software?
Homework Answers
There is only one (or possibly two) factors to be considered here. The first one is the cost of the new software BeanCounter. The second one (possibly) is any refund that could be obtained from the supplier of the faulty software (CookTheBooks), but it is not going to affect the decision. This, as well as, the cost of acquisition of the faulty software are in the nature of sunk costs.
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Last year, your company purchased a site license to the
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ending inventories. It has assembled all of its costs from last
year and would like your assistance in sorting these costs into
various categories, depicting them graphically, and preparing
traditional and contribution format income statements. (Using
Excel)
1. Go to the “Cost Summary” tab. Using
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a. Calculate the company’s total product costs
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