Guillermo Furniture Store

Guillermo Furniture Store located in Sonora, Mexico is a local furniture store that offers traditional pieces and high-end custom pieces. Guillermo has faced many changes in the dynamic of his business location from growth and competition.   Changes in the cost of labor and growth potential that can benefit Guillermo whi9le aligning his company for success in the future. To enable a well thought out plan, discussions of the areas of concerns are addressed in this paper.
Cost relationships and behaviors
The costs that effect Guillermo’s furniture store are the increase in labor costs, high-tech automation, foreign competitor with robotics and precision, growth of the communities in Sonora. The behaviors affecting the results of the cost increases Guillermo is considering are automating his mid-grade and high-end pieces, becoming a broker for a foreign competitor, or merging with a larger national company. Guillermo has patented a finish for furniture that is flame retardant that creates a value for his customers. The added value can be applied to his future if Guillermo decides to transfer his business to a brokerage house and distributor, which will not cut into his high-end business. Managers have to determine the costs that can be controlled and the variable costs that arise with routine business activities. The units produced are connected to various, each of which has a cost that affects the production. The different activities involved in creating a piece of custom furniture are the materials, labor, use of machinery, and other resources. The manager must be able to allocate all costs from within the organization, and cost drivers within the community where the business operates (Horngen,
Learning what each cost driver is, Guillermo can better determine the best course of action for his company he has rising costs as his company now operates, the alternatives and how the alternatives affect costs and time management. This...