Accounting Case Analysis: Electronic Commerce Network (A) & (B)

Complete all analysis contained in both parts of the case with work supported by an excel file. Analysis includes the following six questions:

Due Wednesday at Noon PST

1. Review the Brainshark presentation on the analysis done in the A case to calculate the cost for ECN to “capture” and “load” a customer onto its network. Do you agree with the analysis? Would you suggest any improvements?

2. Assuming the analysis/improved analysis is correct, what actions would you take given that ECN is now in its second year and basically doing the same thing as before in this area?

3. Given that Exhibit 3 in the A case identified the “people” cost for the nine technicians involved with running the transaction processing at $1,237,500 and the B case identified the “system depreciation” for transaction processing at $1,350,000: 

Carefully read the chapter on Capacity Analysis and identify the productive capacity, the non-productive capacity, and the idle capacity.

4. With this information, calculate the cost to process a transaction for ECN.

5. Does this analysis suggest any changes in strategy for ECN?

6. Given questions 3, 4, and 5, if you were a venture capitalist would you finance the next round for ECN?