The Income Information Sheet - Essay Example

The sheet is very helpful in ascertaining the advantages and disadvantages of each course of action. An example of this is the data that compares the “benefits cost” among the alternatives. The data shows that indeed, the “broker” option yields the largest savings in wages, which can be very essential information if labor cost is forecasted to continuously increase. On the other hand, if equipment prices will continue to rise, the data will also help identify the disadvantage of “hi-tech” and broker options.

The Assets, Liabilities, and Equity Information provide a glimpse into the financial health of the company. Particularly, it tells about the company’s liquidity which may allow it to invest in hi-tech equipment, or its liabilities record which can guarantee a source of leverage in case the current cash standing is not enough. The Accounts Receivable is also useful in determining possible sources of cash in the future, while the equity information gives information into the ownership of shareholders in the company.

The budget data and variance analysis helps to distinguish which of the inputs to production needs to economize and which among these are kept within the budget. Similarly, variance analysis helps keep the cost within the budget. Lastly, the information given by the sales forecast will help Guillermo to decide which among the alternatives is best given the future demand for his products.

Deciding to shift to distribution via his planned tie-up with the foreign company might bring a conflict of interest for Guillermo as he also carries his brand and his type of products which are comparable and which may be in direct competition with the products that he distributes for other companies.

As was stated, he still has the desire to retain his high-end customers, particularly for his flame retardant and stain-resistant furniture, for which only he has the patent. Although it was stated that the market for this is smaller compared to the finished coating, Guillermo has all the reasons to push more for his product than that of the foreign business partner. The conflict of interest might pose a serious ethical problem in the future which might ruin his relationship with the foreign manufacturer. Being a representative of another company whose product competes with your own will affect your loyalty to the company. It is often a business policy for employees or business partners to avoid conflict of interest, such as Blue Cross’ policy of avoiding situations where personal interests can run in contrast to the interest of the company (Blue Cross Blue Shield of Illinois). Conflict of interest, if not resolved, can create impropriety that can undermine confidence in the conflicted individual or organization  (Wikimedia Foundations, Inc, 2009).

The income information is still the most relevant especially since it gives a direct comparison of the benefits and costs of each of the alternatives. It reveals specific details such as production capacity, direct costs, and indirect costs incurred for every alternative. Looking at the future of the company, this information would be relevant and essential. In the field of Economics, each alternative represents the opportunity cost of the other decision. Comparing the benefits and costs, especially the expected net incomes from all alternatives, gives information as to what you have to forego in exchange for the one that would give the highest return.