Solutions Manual

to accompany

Accounting Information Systems 4e

Brett Considine, Alison Parkes, Karin Olesen, Yvette Blount & Derek Speer

by
Alison Parkes

John Wiley & Sons Australia, Ltd 2013

Chapter 9: Transaction cycle – the revenue cycle
Discussion Questions
9.1 Brisbane Ltd has always had a strategy of product differentiation; that is, providing high quality products and extracting a price premium from the market. During the recent economic downturn, Brisbane Ltd has seen its customer base diminish and has decided to move strategically to a cost leadership strategy, that is, to try to sell more products at a lower price.
(a) What are the implications of this strategy change for the revenue cycle? (LO1).
This strategy change will have big implications for the revenue cycle, which is fundamentally driven by the level of sales. All existing policies and procedures will be geared around volume, pricing and quality targets flowing from the product differentiation (high price / high quality) strategy. To move to a cost leadership (high volume / low price) strategy requires revisiting and realigning existing policies and procedures.

(b) What changes would you expect to see in the revenue cycle? (LO4).
Assessing changes in the order of the processes in the revenue cycle:
1.1 The inventory check would be performed as described however the policy relating to tolerances on inventory decisions may alter, allowing Brisbane Ltd to accept orders that they may previously have not processed. The logic behind this is that a product differentiation strategy promotes a desire to maintain high levels of customer satisfaction and service, however under a cost leadership strategy customer service, while still important, may be overridden by desire to maintain sales volume. Risking offending a customer by promising to supply and