The Guillermo Furniture Store Scenario

Phoenix University

ACC 561-Accounting


The Guillermo Furniture store has been a successfully ran business for quite a few years without any competition in the market area around Sonora, Mexico. The location has provided low living costs, low wages, and plenty of resources for a hand crafted furniture store, wood. However as technology advances, living expenses and wages increase throughout the world, the next manufacturer of furniture continuously looks for a better location to do business. And so, in moves a competitor of the Guillermo Furniture store that can make furniture quicker, less expensive, and keep their overall costs down. Guillermo Navallez must consider many factors when deciding on how he will compete with this new competition while keeping his original hand crafted furniture products available to his customers, and maintain low overhead costs. Considerations need to be addressed as to ethical accounting in order to make his company look financially competitive, how to use his budget and performance reports to decide if he should be a distributor for another company, and what accounting information is most relevant to consider when making his decisions. By answering these questions, Guillermo Furniture will be able to compete with any competitor and make a decision that will lead him to a successful future.

In making the decision on whether or not to be a distributor for the furniture business that is based out of Norway, Guillermo Furniture can use the budget and performance reports to see if he can still make a profit. Looking at the budget, Guillermo has budgeted pretty close to the actual expenses, however has actually spent more and under budgeted. Looking at these results, it would be easy for Guillermo Furniture to know that they will not make as much using their same techniques. Additionally, as the reports show that the rate of inflation climbs at 3%, sales growth is at 1%, which...