Guillermo Furniture Store

Guillermo Furniture Store

Managerial decision-making basis is a correlation of cost relationships, control systems, and financial analysis.   The use of financial reports such as income statements, budgets, and past financial data is used to calculate current profitability in addition to formulating future strategic plans.   The use of the above stated techniques will be used to assess Guillermo Furniture Store’s current profitability and the possible future outcomes.  
Cost Relationship Behaviors
Decision-making and management are not separate functions. Decision-making is tied with the other functions, such as Coordinating, Planning, and Controlling (Horngren, 2008). It is important for Guillermo to use his budgets and performance reports when decision making. A good example would be that if he has a critical decision to make about which avenue he should take to obtain the best results. When examining the budget both past and present, Guillermo can make decisions based on solid information obtained by this data
The most important areas of decision making that must be discussed is how the cost behaviors at Guillermo can affect the decision making strategies of the managers. These cost relationships and behaviors can affect manager’s decisions in a many ways. Cost behaviors are an important way of describing the changes and receptiveness that costs have in relation to changes in production and sales. In order for a company to look at this data it must make sure to have a relevant range of which you can compare changes within the sales and production numbers. These relationships have a wealth of knowledge and valuable information that help a business better understand its operations, and can also help with determining Cost Volume Profit (CVP) relationships. They can also help with budgets, forecasting, and product differentiation/effectiveness (Horngren, 2008).  

One of the biggest parts of cost behavior and relationship analysis is how...