Guillermo Furniture Store

Colleen Long


August 5, 2010
John Hammann

Guillermo Furniture Store

      Guillermo Navallez’s life is good and he is happy making furniture in Sonora, Mexico. Sonora, Mexico is known for it is beautiful vacation spot but it also is a big furniture manufacturing spot located in North America. Guillermo makes handcrafted furniture at an inexpensive price and with great quality. However, some unforeseen events occurred causing Guillermo’s Furniture Store to look at alternatives in producing his furniture against new competition. A new company from overseas with high tech productions at a low cost has entered the furniture market and a large retailer nearby has raised the cost of labor. Unfortunately, he his watching his profits diminish as prices fall and costs rises. This paper will address how Guillermo can use budget and performance reports in his decision-making process, how ethics will influence his accounting decisions, and what accounting information is most relevant when making his decisions.
      A budget report expresses a plan for future periods and is prepared at various levels of a company. It helps reflects a company’s goal and what objective they want to accomplish. A budget is a plan of action. While examining performance reports helps to compare budgeted results with actual results. Also, performance reports give feedback by comparing results with plans and highlight variance derived from these plans (Homgren, 2008 ). Implementing a budget can help for planned sales and expenses to maximize a profit. Guillermo wants to maintain a profit and return on his investments in order for his company to keep growing and making furniture.   There is a good supply of timber where he lives and a huge infrastructure is also nearby, which will allow for a bigger labor pool. The budget and performance report is prevalent to help evaluate and...