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Guillermo Furniture Store
Guillermo Furniture is a model company provided by the University of Phoenix (2009) in which a company manufactures products using inexpensive labor and considers various methods of accounting to forecast future business options . The owner, Guillermo, has suffered profit loss and Team A has focused on how the Guillermo Furniture model will be able to survive an economic struggle (University of Phoenix, 2009). Evaluated here will be an effective control system in reference to organizational activities, evaluating cost relationships and behaviors to assist in the decision-making process. Further, Team A will provide a break-even analysis on Guillermo’s flame-retardant process, a computation regarding return on investment, residual income, and economic value using the aforementioned control system will be provided.
Evaluation of Control System
A control system integrates every facet of a business by fusing the forecasting and planning together with the supporting and coordinating of internal operations to facilitate a budget (Horngren, 2008). Team A concluded that a successful control system within the context of Guillermo’s furniture includes forecasting with a clear path and strong vision that is carried out effectively throughout the entire organization. Having a control system in place ensures that strategic thought processes are carried out efficiently and effectively, while allowing some degree of flexibility for change as needed (Horngren, 2008).
Team A assessed that Guillermo’s Furniture ideas about gaining profitability through many avenues, such as a merger or by creating a business connection with a Norwegian distributor with whom all of the manufacturing will take place, is necessary to succeed. Further, according to the Guillermo Furniture model (2009), business will improve by using a patented, fire-retardant coating for the furniture.
According to Horgren (2008), planning and control are strongly…