Reference no: EM132859070

Project Description:

Pony Espresso is a small business that sells specialty coffee drinks at office buildings. Each morning and afternoon, trucks arrive at offices' front entrances, and the office building employees purchase various beverages such as Java du Jour and Café de Colombia. The business is profitable. The Pony Espresso office is located north of town, where lease rates are less expensive. However, the principal sales area is south of town. This means the trucks must drive across town four times each day. The cost of transportation to and from the sales area plus the power demands of the trucks' coffee brewing equipment are a significant portion of variable costs.

Pony Espresso could reduce the amount of driving and, therefore, the variable costs, if it moved its office closer to the sales area. Pony Espresso presently has fixed costs of $10,000 per month. The lease of a new office, closer to the sales area, would cost an additional $2,200 per month. This would increase the fixed costs to $12,200 per month. Although the lease of new offices would increase the fixed costs, a careful estimate of the potential savings in gasoline and vehicle maintenance indicates that Pony Espresso could reduce the variable costs from $0.60 per unit to $0.35 per unit. Total sales are unlikely to increase as a result of the move, but the savings in variable costs should increase the annual profit.

Consider the information provided to you from the owner in the data in the next page. Look at the change in the variability of the profit from month to month. November through January, when it is much more difficult to lure office workers out into the cold to purchase coffee, Pony Espresso barely breaks even. In fact, in December, the business lost money.

Read the two articles and answer the following questions:

· "The Role of Management Information Systems in Decision Making" https://bizfluent.com/facts-6938756-application-mis-business.html

"The Role of Management Information Systems in Decision-Making" https://smallbusiness.chron.com/importance-information-systems-organization-69529.html

1. Explain how Management Information Systems can be used for business decision making. What are the benefits?

2. Advise Pony Espresso whether or not it should move its office to the south of town. To justify your suggestion, you have to:

a) Calculate the Sales, Fixed and Variable Costs on the existing lease information using the monthly sales figures provided to you in the data table.

b) Calculate the Sales, Fixed and Variable Costs from the new lease information provided above.

c) Calculate the EBIT (earnings before interest and taxes) for both options by deducting Fixed and Variable Costs from Sales.

3. Make an Excel file (with your calculations) containing the following information ( attached image)