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Guillermos Scenario

In: Business and Management

Submitted By mbarraza
Words 2521
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Guillermo Navallez has made furniture for years near his Sonoran home in Mexico as the area had a good supply of timber for the variety of tables and chairs produced by his company; and labor was also relatively inexpensive (University of Phoenix, 2009) Unfortunately for Guillermo, in the 1990s a competitor from overseas entered the furniture market causing a large decrease in business for Guillermo. Luckily, Guillermo has a few tools at his disposal to help make the tough decisions he is now faced with. Accounting budget and performance reports can be used in decision making in a variety of ways such as; estimating the expected revenue and expenditure of a business. These reports would be helpful in Guillermo's decision of which option will be best suited for his business. Guillermo must decide whether to purchase the high tech computer controlled laser lathe, represent and sell for a manufacturer in Norway, or continue selling his hand crafted coated furniture.
Budget:
With the use of an account budget Guillermo can project required labor hours, product cost, and expected return. This type of income information can provide comparative figures of expected profit for the different business options. In the case of the three business options available to Guillermo, he can assess the net revenue and return on investment to help him decide which option will be more profitable for the business.
Performance Report:
A performance report can also help Guillermo compare his business options by providing income information in relation to performance parameters. Performance reports can also provide comparative figures for the options that Guillermo faces by using the income information report the company has calculated which includes the expected net income before taxes. Looking at the figures one can say that using computer controlled lathe to manufacturer is the best...

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