Rodolfo Furniture Store Budget Analysis
University of Phoenix PR Campus
ACC / 561PR
Rafael Marrero Diaz
November 9th, 2012
Rodolfo Furniture Store Budget analysis is important for any corporation. From small businesses to large enterprises; all organizations evaluate the numbers in order to get a picture of where the company stands economically. This will serve as a basis in order to make decisions as to the direction the entity would like to go. Erroneous decisions can lead to bad decisions that may end up in losses for the company. Rodolfo Furniture is on the verge of making a shift from a furniture maker to distributer. Yet…show more content… In the other hand, over forecast sales refers to the amounts of raw material to be purchased and excessive amounts of finished products to be sold. This excessiveness of raw materials may tie up the capital available to use and the excess finished product will make the company incur in warehouse storage costs; both excesses if repeated constantly may put the company at risk of bankruptcy.
Resource risks When sales are over forecast, underutilized workers may have to be reduced. This action will result in a bad image for the company and will break the trust/bond that was built between the company and the workers as they will feel betrayed. If the sales are under forecast, it will happen the exactly opposite, the company will lack of workers to meet demands. This can result in bad image, losses, service levels will be affected as workers would have to work overtime to cover for the company which can lead to sicknesses and excessive absenteeism.
Financial risks This type of errors affects the company’s financial health. The excess of material will lead to excessive costs of unnecessary storage since the excess should have never occurred. Also, over forecast can result in the purchase of unnecessary machinery. Furthermore, if the company forecasts erroneously in a consistent manner, this can lead the company into a raise in the