Rodolfo Furniture Store Budget Analysis

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Rodolfo Furniture Store Budget Analysis
Edric Hernandez-Cruz
Gisela Franqui-Atiles
Valerie Santiago-Rodriguez
Yachira Rodriguez-Cuevas
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 only if the ethical accounting practices have been place into the production of the analysis; can Rodolfo Furniture decide on its future. Budgeting: Risks Associated with Sales Forecast

The preparation of the usually begins with a sales forecast. The sales forecast and the anticipated inventory levels determine the production to be budgeted. Furthermore, the company’s sales forecast along with its experience, and collection policies determine the cash inflows for the company.

In the scenario, Rodolfo uses his company’s flexible budget, as a guide, to determine the costs that should have been for an attained level of activity. For, instance if his company intended to manufacture or produce 50,000 units, the budget must have been prepared for 49,000 units, 51,000 units, 52,000, and so on.

Major risks in sales forecasting
Production risks
In a manufacturing environment, like the illustration Rodolfo’s scenario, sales forecast determine production schedules. The companies use such forecasts to determine the exact amounts of raw materials and production issues; they need to have an idea of what they are to produce. Two problems can occur, sales under forecast or sales over forecast. Under forecast sales refers to the fact...
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