The Challenges of Cost Benefit Analysis, in a Computerized Accounting System (A Case Study of Coca-Cola Bottling Company, Enugu)
STATEMENT OF THE OBJECTIVE
- To ascertain if the introduction of computer system may lead to industrial unrest as workers resists
- To identify the wrong computer systems either in terms of obsolesce or unsuitableness for the need of the
- To determine how companies can realize the full potentials of the computer systems installed thereby leading to
- To examine how companies data processing operation can be amenable to automation so that they cannot be overlooked.
REVIEW OF RELATED LITERATURE
The review at literature serves to set the theoretical basis for a research work. Related literature will be reviewed under the concept of computerized; accounting system; the analysis of cost benefit of computerization of accounting system.
This chapter reviews literature relating to the theme and sub-theme of this study. Major ideas of this section are grouped and presented under the following:
There seems to be a general consensus amongst most researchers, authors and managers alike that same computerization of business data is crucial. Muscleman Hugihes (1980); are of the opinion that since management dedication are based on up-to-date data, it is essential that a business management information, system be an effective one. And the rapidly increase availability of business information, together with the ever growing complexity and variety of data to be analyzed required some modern scheme for processing business information.
The same information is used in many different departments of a typical business, therefore business data be organized and stored systematically so that it may be retrieved immediately when needed, so the mechanization and automating of records handing is a business “must”. It is this implicit faith in computerization that will be tested with a view to answering some of the questions raised in the first chapter.
EFFECT ON PERSONNEL
According to Ayanyaogu, (1991), there is always the fear that the use of computers by private establishments will cause mass unemployment suffered by the present computer literate personnel. There is a great deal of disagreement about whether computers will create more or fewer jobs. So some school of thought hold that computers will cause many workers in government and private establishments to lose their jobs, while others thinker that presence of computers will cause more jobs to be created and make the existing ones more interesting. As the world gradually moves into the computer and information age, some jobs which people have will become unnecessary, economically inefficient and result to wastage of resources and will require those who have them to be retained in new skills some of the areas that have already been affected includes, Account clerks, Books, keepers, clerical officers or file clerks. Okoro (sees the effect on personnel against the background of workers natural resistance to change which may result in behaviour which adversely affects efficiency of the computer system, producing accounting information. Such behaviour may be manifested in physical sabotage of the system, avoidance and deliberate attempt to blame the new system for all problems.
Over the years, electronic hard and software have made great impact into the accounting prospection. In particular, the impact of computer on efficiency has been phenomental coupled with the rising volume at business. It is imperative for the accountant to be computer literature. Kodunmi (1990); therefore advocated training programme for accounting personnel to equip them for computerization of industry.
Olukanmi in of the opinion that the introduction certain classes of computer systems also create new jobs. Another author, Terry Carbitt (1991) advises that staff reduction should not be a reason for computerization t least in the short run. He is of the opinion that the staff should be involved in the introduction of micro-computer from the beginning and they should be reassured that the micro- computer is not being introduced to reduce staff but to increase efficiency. Appleby (1981) shared the same view with Terry but went further to stress that workers should be made to be aware that the computer is for greater business efficiency and not an avenue to reduce labour costs.
THE FEASIBILITY STUDY
Many reasons may lead an organization into considering the use of computer. Whatever the reason, or combination of reasons, the Board of Directors wishes to know whether a computer is appropriate for the business and, it so which procedures are suitable for conversion and what it entails. The object of a preliminary study is justified. It should indicate the scale of the computer system required which must be in line with the type of business carried out and give some of the magnitude of costs involved.
Accounting to Lostly (1969) the following characteristics are desirable in the man who will carry out the survey:-
Poor record keeping, it is also envisaged, will be a hindrance to obtaining adequate information especially from the company under study.
Research design is the specification of procedures for collecting and analyzing the data necessary to help solve the problem at hand, such that the difference between the cost and obtaining various levels of accuracy and the expected value of information associated with each level of accuracy is maximized. It is a mode or proof that allows for inferences to be drawn by the researcher concerning casual relation among the variables under investigation. The research instrument used in carrying this study is the questionnaire. Survey design.
SOURCES OF DATA
To every research work, there is always a reliable source from which data are collected. The two sources of data available to the researcher are listed below and explained.
PRIMARY SOURCE OF DATA
Primary source of data is defined as those data containing the full research report including all details necessary to duplicate the study. Primary data are first hand data obtained from the source regarded as original. They are usually collected for specific purpose. This source available the authenticity of information required is obtained. The primary data used in this research was gathered from the questionnaires.
- SECONDARY SOURCE OF DATA: These are data from sources other than the primary source. It covers published materials and information gathered by other agencies for their own purposes but which incidentally is of use to the researcher. It includes text books, journals and lecture notes etc as it is being used for this
AREA OF STUDY
The study area involves coca-kola bottling company limited, Enugu which is the organization used as my case study.
POPULATION OF THE STUDY
This is the collection of all staff of a particular organization such as people, living object. It comprises the relevant management staff of coca-kola bottling limited, Enugu. The total population of the study is 100. The population distribution is as follows.
CHAPTER FOUR DATA
PRESENTATION AND ANALYSIS
In this chapter, all the collected data from the questionnaire are presented , analysis and interpreted.
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
SUMMARY OF FINDINGS
The findings of this study have some important education implications.
- Computerization of coca-cola bottling company Enugu has led to reduction in labour costs. This is as a result of both the reduction of number of clerical staff as well as the elimination of overtime costs previously associated with clerical and routine information
- The use of computer consultancy firm by the company its computerization scheme led to costs savings due to the expert advice systems design on type of hard-ware, soft-ware and peripherals needed as well as maintenance and
- The management is therefore satisfied with the result of the computerization There is consensus that both tangible and intangible benefits of highly significant is equally optimistic that by the time the company is fully computerized, the benefits will be so obvious that they cannot be faulted.
- The introduction of computers did both undermine workers morale.
The main thrust of this study has been to x –ray extent to which a computerized accounting system can be justified by a cost benefit analysis. A attempt was made to quality all the relevant parameters in order to come to an objective concluding. It must not be for gotten that several applications such as in the areas of being budgeting, working capital management, variance analysis as well as business forecasting are yet to be introduce.
These applications when fully implemented will no doubt increase the quantifiable benefits of computerized accounting system.
However, in the final analysis, the researcher from all interviews as well as material gathered has been able to come to the conclusion
that the quantifiable benefits of computerization is subsumed by the intangible benefits is such that to some, increase, efficiency and accuracy of data processing which are unquantifiable , far out weights the costs of acquiring the system.
With such as outlook, therefore, it is hardly surprising that the researcher has been able to conclude that the careful computerization programme of the company has been a systematic approach that involved using of consultants the determination of data processing needs and thus the acquisition of the right type of computer hardware. The acquisition of sufficient knowledge through both outside as well as in house, and the gradual and phased method of implementation which ensures that each application is thoroughly implemented and understood before moving on the other, has to ensure that the benefits of the computerization programme of the company far out weight the costs.
Consequently, and with reference to the objectives of the study as enumerated in chapter 1, it can be concluded that using the study as a feasibility guide – line, computerization of any firm with a moderate level of data processing requirements is cost beneficial provided, that the steps of adequate planning, reliance on experts advice as well as careful and phased implementation is pursued as well the case in coca-kola bottling company Enugu.
In the light of the findings the discussion and the relevant conclusions on the research work, the following recommendations are therefore put forward.
- The data processing department should be a full division alongside the finance i.e. clinical, marketing and personnel department is order to enable it relate as equals with these departments and be able to ascertain their various data processing needs without bias to any particular
- The company should continue to use the computer consultants since it has been seen that their quality of adviceis good and has steered the company in the right direction in terms of costs savings and better quality information at greater speed and accuracy.
- The company should continue to motivate its personnel form more about the use of computers i.e. they should be enable to undergo courses in computer literacy to enable them to fit into the company. In not shell, the company should have a policy of in service – Training of its staff in computer education.
- It bottling company Enugu computerize more functions, the cost per unit of work done well come down that is if the system will be 100 percent utilized the company should look into the modalities and advantages of computerizing its budgetary control as well a cash and workings capital management
- The need for this is avoidable owing to the apparent lack of adequate knowledge of the pattern of production as it links the control mechanism. In budgeting with management of the working capital
This current trend, it has been perceived, has led to a situation where there is hazard management of working capital. At times, owing to poor planning, the company finds itself having to take large overdrafts to meet commitments while at other times their surplus cash for immediate commitments without any plan as to investing such idle cash in short term securities or demand deposits.
With the present trend of high interest rates, the ability of a company to ignore adequate working capital management practices without repercussion can be said to be well-nigh impossible. Bottling company is therefore expected to institute an integrated computer system which will help it to better control its working capital. The proposed system should use information gathered from the various department such as stores, production, personnel, marketing as well as accounting department will in addition furnish such information as to probable sales figures at various times.
The information in its entirely will then be used to procedure cash budgets that will enable coca-cola bottling company Enugu to fore cost its cash requirement accurately, the use of computer will enhance the accuracy of these forecast because any changes in the aforementioned variables will be reflected fed into the computer programmes model for the forecast immediately as ascertained.
Other areas of computerization as business forecasting and variance analysis should be speedily implemented because these will help to make the utilization of the computer system optimal as well as reducing the cost of the company.
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