TVR Heaven Scenario
The market for TVR merchandise is growing and the owners are concerned that their current manual procedures are not enabling them to keep accurate records or statistics which would help them in their decision making, planning and control activities. This problem will be severely worsened with the opening of their mail order and retail shop expansion plans. Following a discussion with another trader they discovered that he uses Sage and Microsoft Word and Excel to help him run his business. He told them that it provides him with the information necessary to run his business efficiently and effectively.
The owners have therefore employed you to analyse their requirements and to develop a suitable system for them utilising these packages. As they need the system to be in place for the 2013 summer show season you are required to provide your written analysis of system requirements and to develop a working prototype by week commencing Monday 18 March 2013.
Coursework Case Study
TVR Heaven
TVR Heaven is a business selling a range of merchandise to TVR car enthusiasts. They currently sell their goods at a number of shows throughout the UK.
It is run by two TVR enthusiasts Mr Andrew Brookes and Mr Chris Wood. They have been trading for two years and despite fierce competition, have seen demand for their products increase rapidly during this period. In view of this they believe that the time is right to open a retail outlet in Sheffield and also open a mail order branch to their business. Both of these are planned to commence in May 2013.
All of the business processes are currently performed manually and the owners are keen to improve the way in which the business performs by introducing an integrated accounting information system (AIS).
They have provided the following outline of how they operate:
Stock
· New products are designed using the Corel Draw package and are saved to a CD ROM which is then given to the supplier with details of the numbers/colours/sizes required either on a personal visit to the supplier or by post.
· Re-orders are either telephoned through to the supplier or given on a personal visit.
· When the stock is ready it is either collected by the owners on one of their visits or delivered by the supplier.
· All purchases are currently on a cash basis.
· The owners keep a manual record of stock ordered and received in a ring binder. Sales and a running total of what remains in stock are also recorded in here. Unfortunately as the owners are often very busy, they sometimes forgot to update these records.
Sales at shows
· All sales are currently made on a cash basis
· They trade from a marquee at a large number of shows throughout the year. To help them out at big shows they employ staff on a casual basis. The staff are friends of the owners who are also TVR enthusiasts.
· Sales are marked off on manually produced stock lists. These lists show the opening stock figures of each item taken to the show. As trading is often hectic at these shows unfortunately they often forget to mark down what has been sold. Another problem they sometimes have is that they forget to take the opening stock lists with them so if they do forget to write down the sale, they have no way of checking what they did sell against what they started with.
· An additional problem they have is deciding what stock to take with them to each show. As their record keeping is fairly haphazard they do not have any statistics to indicate which items/sizes/colours are their best sellers. Accordingly they often do not have the necessary stock to satisfy demand.
Accounting
Accounting records are also manual and reporting is limited to the end of year Income Statement and Balance Sheet. Given their growth strategy this is a key are of concern to them and they know that in order to successfully manage the company more frequent and detailed reports will be necessary an example of this is identification of best sellers as mentioned above. Equally they know that it will be important not to hold stock that is not popular.
Products
The owners have provided the following information regarding their range of products. All products on offer are subject to change according to new product design/market demand.
Tee Shirts
· They offer a range of tee shirts in sizes from S to XXL and each style is offered in Purple, Black, Navy or Grey. Some styles contain slogans and som
· e contain line drawings of cars. Currently 20 styles are available.
· Average Cost: £10, Selling Price: £15
Sweatshirts
· These are the same designs, colours and sizes as offered in Tee Shirts above.
· Average Cost: £16, Selling Price: £25
Mugs
· There are 5 designs available each with a different image of a TVR depicted on them.
· Average Cost: £2, Selling Price: £5
Beanie Hats
· These are available in Purple, Black, Navy or Grey.
· Average Cost: £4.50, Selling Price: £8
Baseball Cap
The baseball caps are available in Navy/Red, Navy /Taupe, Black/Black and Green/Taupe.
Average Cost: £8, Selling Price: £12
Information regarding their intended growth plans.
Products
It is their intention to add new products as they grow.
Funding
Andrew and Chris have secured share capital finance from family members in the sum of £30,000.
Sales by mail order
Order forms will be displayed at every show. They will also put a copy of an order form on every car windscreen in the car park. They have decided that payment by cheque or postal order must accompany every order. They aim to post every order received within one week and are aware that as they operate in a competitive market, quality of product and customer service are very important in order to retain customers. They therefore need to ensure that they do not run out of stocks of popular items.
The Sheffield retail outlet
They have secured an outlet in a key location for which they have signed a 12 month rental agreement. The rent is £20,000 p.a. Business rates will amount to £6250 p.a. Both of these expenses will be paid monthly.
Shop fixtures and fittings will be purchased for approximately £18,500 and they intend to stock 50 of each of their lines. However, as time progresses, as stated above, they wish to add to the product range.
Sales and Purchases
All sales and purchases are currently on a cash basis. However, they have negotiated credit terms of 30 days with suppliers for future orders and in addition they have been approached by several clubs who would like personalised ranges to be developed and it is intended that they will allow 30 days credit on these sales.
Opening trial balance.
£
Capital
30000
Stock of Mugs
250
Stock of Tee Shirts
400
Stock of Sweatshirts
640
Stock of Baseball caps
200
Stock of Beanies
180
Company van (at cost)
30000
Van Depreciation (2 yrs)
6000
Marquee
2000
Generator
1500
Bank
6000
Fixtures and Fittings
2500
Cash
750
Retained Profits
8420
Written Analysis
Produce a written requirements analysis for TVR Heaven (2000 words +/- 10%). This must be in report format and fully cover the information needs of the accounting information users and stakeholders of the business from the new computerised accounting information system.
The form this requirements analysis will take is flexible and there are a number of templates available that you could use. We have no preference but you should ensure that it does cover as a minimum:
Introduction and a critical analysis of the existing systems and processes;
Identification of the system users and stakeholder, including an explanation of the nature of information required by them and why they require such information;
The Business case (i.e. having carried out your analysis and identified information requirements of the various users and stakeholders, explain why the business should proceed in implementing the new AIS)
Functional and Operational Requirements:
The specific functions, features and reports required by the new computerised accounting information systems to meet the needs of the business and its users and stakeholders
The System Requirements including control and security measures
· Recommendations that solve any problems that you identified, incorporate any future plans and in addition improve the quality of information provided for planning, control and decision making activities.(A simple example of this would be to include a sentence such as the proposed system should allow for the production of an Income Statement, Statement of Changes in Equity and Balance Sheet to meet specific statutory reporting requirement along with a short description of why.)