Guillermo Furniture Store Analysis

1545 WordsFeb 12, 20117 Pages
Guillermo Furniture Store Analysis Team B date Acc/561 Guillermo Furniture Store Analysis Guillermo Navallez, as an owner and manager of a specialty furniture store in Sonora, Mexico, has needed to explore many factors to keeping his business profitably operating. With the economy changing around him Guillermo has explored in the past six weeks his budget, performance reports, financial statement analysis, sales forecasts, and most recently the store’s cost relationships and behaviors. The following analysis will discuss the importance of cost relationship behaviors and how that affects Guillermo’s management decisions. It will also cover the current Management Control System, the current break…show more content…
One of the most popular measures is the balanced scorecard (BSC). The BSC “strikes a balance between financial and nonfinancial measures (Horngren, Sundem, Stratton, 2008, p. 401)” and is used by about 50% of the top 1,000 United States firms. To develop this system, Guillermo needs to decide what the responsibility centers are and how performance is measured and acknowledged. He will also need to define the key performance indicators; financials, customers, internal processes, and employee growth and learning. The primary goal of a control system such as BSC is to develop the financial and nonfinancial measurements critical to the firm’s growth and profitability. In business, it is all a circle, where employee and customer satisfaction proves to play large roles in the ultimate success, or lack there-of, of a firm. Guillermo, by implementing a BSC, on a limited scale, will have better control of these factors. Financially, by using the BSC, firms monitor changes to productivity, quality, and cycle-time. Although it is usually not financially feasible to measure every aspect of these controls separately, the more that can be monitored, managers will be able to control what is within their ability to control. Guillermo will need to be careful to establish a system of monitoring performance that allows him to see how manager’s performance is lining up with controllable costs, such as employee hours, along with

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