Furniture Store Analysis Paper

Essay by simone24University, Bachelor'sA, November 2009

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University of PhoenixOctober 26, 2009Guillermo Furniture Store Budget AnalysisSynopsisThis is an all inclusive analysis of Guillermo's Furniture Store. Assuming Guillermo continues to conduct business as is a revised flex budget has been created. In an effort to ensure comprehension of the flex budget an analysis of the risks associated with sales forecasts will be explored. In addition, the ethical considerations will also be explored as part of the preparation and ensuing use of this new flex budget. To sum up this analysis the analyst will perform an ethical analysis considering Guillermo's organizational code of ethics. This analysis will optimistically assist Guillermo in proactively exercising behavior that is ethical.

Forecast RisksIn order to invest and initiate newer products an organization must forecast or plan ahead. Guillermo's organization is no exception. In the past Guillermo has not maximized his resources in order to increase profits. Instead of producing more of the product that sells the most and too much of the product that is not so much in demand Guillermo has opted to do the opposite.

The new flex budget should assist Guillermo with moving forward with his company leaning toward being more profitable. What is a flex budget? A flex budget is an adjustable budget that bends or flexes with any alterations in activity volume. What this means in layman's terms is that whether or not there is an increase or decrease in business activity efficiency should still be a factor (Hewitt, 2009). As part of this process past data should not be used for current situations because the past data may not be relevant to what's going on currently. Therefore, forecasting comes into play that sometimes tempts executives into falsifying figures to fit their agenda of deceit. What is not needed in this process is called budget padding which is...