Guillermo Furniture Store Paper

Guillermo Furniture Store Paper_ACCT_561_Week 6

Several areas of financial study are important for companies to grow and succeed. The study of an organization’s cost relationship and behaviors, different control systems, and a break even analysis are some of those tools that aid in the planning and decision-making for managers. For the purpose of this paper it will use the Guillermo Furniture Scenario to manipulate data to determine cost relationships and behaviors, describe how those relationships and behaviors effect management decisions along with control systems that will aid Guillermo Furniture store. Furthermore, the paper will determine the financial results for implementing a product upgrade to the current product line. The paper will provide an accurate break-even analysis, compute return on investment, residual income, and economic value for the current scenario.

Cost Relationships and Behaviors
Management accounting contains a number of decision making tools that require change in all operating costs and expenses into fixed and variable components. The responsibility for providing this cost behavior information falls squarely upon the shoulders of the management accountant. The conversion of ordinary financial data as typically found in the general ledger accounts requires that the management accountants has a thorough understanding of cost behavior theory (Micro Business Publications).   It is vital that Guillermo analyzes the way in which cost reacts or responds to changes in the level of the organizations business activity.   Guillermo essentially needs to evaluate the series of output of sales over, which cost behavior patterns continue unchanged.   By grasping the relationship between revenue, costs, and production or sales volumes, Guillermo will be able to make great decisions for the organization.   According to Horngren, 2008 analyzing cost-volume-profit relationships is an important management responsibility.   Managers are advised to gain a...