Guillermo Sceanario

RUNNING HEAD:   Guillermo Furniture Store Scenario Paper

Guillermo Furniture Store Scenario
Sara Johnson
ACC 561:   Accounting
University of Phoenix:   Online
May 24, 2010

Guillermo Furniture Store Scenario
Guillermo Navallez is a furniture manufacturer in Sonora, Mexico.   His handcrafted furniture is priced higher due to the quality of the product he makes.   Unfortunately, a new competitor from Norway entered his local market offering the exact furniture for a lower price.   In addition, the small town he operates in became suddenly bustling raising the costs of the used to be cheap labor force.   In order to survive in the same community, Guillermo must utilize a budget and performance reports, make ethical accounting decisions, and make informed accounting decisions.
Guillermo must utilize his budget and performance reports in order to survive the new competition and increases in labor costs.   A budget is an aid to help a company adhere to its financial plan (Horngren, 2008).   According to Guillermo’s budget, he is over-estimating how many units he will sell each month.   This means he is not adhering to his financial plan.   He might want to consider using a different way to estimate how many units he will sell.   Secondly, he could use his performance reports to help with this estimate.   A performance report is feedback received by comparing results with the budget and highlighting deviations from the budget (Horngren, 2008).   If he sold, for example, 10% less high-end items then he was expecting to, and then the next month he could estimate 10% less than his first estimate may be.  
In order to outlive the new competition and rising labor costs, Guillermo must make ethical accounting decisions.   How Guillermo makes ethical decisions in his life will affect how he makes ethical decisions in his company.   In order to make sound, ethical decisions, Guillermo should make sure he is focusing on long-term results, paying attention to the small details,...