Guillermo Furniture Scenario - the Uncharted Territory

Guillermo Furniture Scenario - the Uncharted Territory

  • Submitted By: kartesdj
  • Date Submitted: 08/18/2009 8:08 PM
  • Category: Business
  • Words: 714
  • Page: 3
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Week 1
Guillermo Furniture Store Scenario
Dave Kartes
James Murtland
University of Phoenix
March 25, 2009

Guillermo Furniture Store Scenario
The purpose of this paper is to develop a 700 word or less document explaining how Guillermo can utilize budgets and performance reports for decision making, how ethics can influence accounting decisions and which accounting data is most relevant in decision making.

Guillermo Navallez has found himself in a new uncharted territory after many years of being in the furniture business in the once sleepy town of Sonora, Mexico. The community had recently grown and established itself as a leading retail headquarters triggering a large influx of people and other businesses. This significant growth of Sonora has caused the labor market to notably change, causing an overall increase in labor wages that Guillermo must pay to retain his good employees. In addition, a new overseas competitor is making life difficult in the furniture business by creating a product similar but at a reduced cost as compared to Guillermo’s products. A quick review of the budget statement has shown a steady downward trend of decreasing sales of his high end furniture. In addition, fixed costs have increased to build his highly prized furniture.
Guillermo knew he was fortunate to retain his business format as long as he had, but times are changing due to the overseas competition and the changing labor market in Sonora. He must change his business strategy to remain in the furniture business. He could not afford to operate in this manner for too long, he also had many long term and faithful employees to think about too.
After careful scrutiny of the budget statement Guillermo was able to identify two negative trends. The first issue is the decrease of sales of the high end furniture from a high of 470 units in March to a low of 416 units in May. The second issue identified is the increase in the operating...

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