...Running head: Guillermo Furniture Store The Guillermo Furniture Store Orlando Hopper ACC/561 – Accounting University of Phoenix (Instructor’s Name) October 4, 2010 The Guillermo Furniture Store Guillermo Furniture Store is one of the largest furniture company’s in North America, which is located in Sonora Mexico. Guillermo is a very establish and successful businessmen. Guillermo over the last several years has specialized in making handcrafted premium grade products. Guillermo belief’s is in the quality of his product and prices. Guillermo has been able to charge high-end prices and carry a low labor cost and budget. Guillermo is able to purchase his supplies at low cost which are from Mexico. Till recent, Guillermo furniture company was the only one in his area. With a foreign competitor entering the furniture market and offering the same furniture and selling for a less price which is using high-tech equipment to build their furniture and has threaten Guillermo’s business, which has felt some decline in the result of competition. Guillermo will have to make some important decisions that can affect his...
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...Guillermo Furniture Store Scenario Tieshia Brewster University of Phoenix Dr. Larry Key, PhD Abstract A beautiful vacation spot in Sonora, Mexico has a large furniture manufacturing locate in North America. Guillermo has a furniture store nearby his home. The area has a significant supply lumbar for the particular tables and chairs sold by his company and cheap labor. On Guillermo hand craft product he price at a slight premium. Other than that life was tremendous for Guillermo until the 1990s when other competitors came into town pushing Guillermo to think of other ways of survival for his company. Guillermo Furniture Store Scenario Guillermo is using the decision- making process to correct reports both budgets and performance. Guillermo decision is to obtain a computer control lasher lathe, become a spokesperson for other manufacturers, or shall his finish goods. Guillermo can use production data using man hours, financial statements, and use the production hours to acute profits from selling the finish goods. This analysis should help Guillermo decide the market price of the tremendous property that he want to it he accept the spokesperson position. In order for Guillermo...
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...Guillermo Furniture Store Scenario ACC/561 Guillermo Furniture Store Scenario Guillermo Furniture Store (GFS) owned and operated by Guillermo Navallez, has created high quality furniture in Sonora, Mexico for many years. Guillermo establish the business in his home town where lumber and labor costs were readily available at a low cost. There was also limited competition for labor. Over the last several years the local economy has changed. A new business moved in increasing competition for labor, thus increasing the standard wage in the area. The impact to the company’s profits forced Guillermo to consider several potential alternatives: 1) upgrading current equipment and shifting from manufacturing to distribution to support a Norwegian based company, 2) limiting GFS business to custom work, and 3) changing the GFS furniture coating process (University of Phoenix, 2008). This paper will show how Guillermo can make the best decisions for his family and company by using budget and performance reports, accounting information, and ethics considerations. Budget and Performance Reports Businesses use budget and performance reports when making decisions. Budget reports provide a quantitative plan for a particular course of action. Budget reports help in the coordination and implementation phases of a business plan. Performance reports provide feedback by showing a comparison between plans and results. They also show variances for consideration in the decision-making process...
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...head: GUILLERMO FURNITURE STORE Guillermo Furniture Store ACC/561 Dr. A. Matias, CPA, MBA December 15, 2010 Abstract The main purpose of Guillermo Furniture store is to obtain a control system to help management meets its organizational needs. The control system must identify responsibility, develop performance measures, establish daily monitoring, and reporting structure, weight costs, benefits, and motivation to achieve goal congruence and managerial effort. The decision-making should be centered on Guillermo’s business goals; thus, reflecting the company long term and short term goals. Team A will examined Guillermo’s Furniture Store and discuss the following: Cost relationships and behaviors in the company decision-making in implementing a control system that will help Guillermo to achieve its organizational goals. In addition, the paper will examine the break-even analysis on Guillermo’s current situation on the return on investment, and economic value added for current situation. Guillermo Furniture Store The purpose of this paper is to examine Guillermo Furniture Store decision-making prerogatives for manager, and determines, which control system would help Guillermo to achieve its organizational goals. Team A will provide a break-even analysis on the current situation considering the possible effect s of selling the flame-retardant separately. The paper will also examine return on investment, and economic value added for current situation. Guillermo Furniture...
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...The Guillermo Furniture Store Decisions Team A Accounting/ACC 561 November 10, 2010 Professor Rios, Angel J. Guillermo Furniture Store Decisions Navallez Guillermo’s quest to remain competitive in the furniture industry comes down to analyzing cost accounting measures. By carefully analyzing balance sheets and income statements, accounting officials can provide management a synopsis of where company strengths and weaknesses are, and then corrective measures can be adjusted to improve company performance. A break even analysis, return on investment, and residual income will be calculated as well as many other issues will be discussed to allow Guillermo to make the best informed decision for his company. In this report, Team A examines the components that make up a cost control system and explains how management uses this information in their decision-making process. Guillermo Furniture Store can use the following three systems to help achieve the store’s organizational goal. The Quality Control System is in the manufacturing business. Quality is the number one priority concerning customer satisfaction. Thereby the quality control system is required to satisfy the customer’s needs and trends. Quality control is a system of routine technical activities, to measure and control the quality of the inventory as it is being developed (Quality Assurance and Quality Control, 2010). Once ensured that customers are satisfied with their high quality, Guillermo Furniture...
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...Decision-Making: Guillermo Furniture Store Scenario Decision-Making: Guillermo Furniture Store Scenario Located in Sonora, Mexico, Guillermo Furniture has been successful and reputable in the region as a provider of premium handcrafted products. Decisions must now be made by Guillermo Navallez as to whether he should adopt computer technology, transition from a manufacturer to a distributor for a Norwegian company, or change his furniture market line to include flame retardant finish. This involves a detailed analysis of the operating budget and analysis of market performance. Navallez will need to consider ethical issues he may face within the organization. Finally, Navallez will examine the business tools most pertinent toward making an informed business decision. Budgets and Performance in Decision-Making Authors Horngren, Sundem, Stratton, Burgstahler, and Schatzberg (2008) identify a budget as a method for a company to employ when it is estimating revenue, expenditure and profitability. Navallez is in the process of exploring the decision to cut workers and use mechanical devices. While the initial cost of the high tech equipment would be significant, with the aid of a budget report, Navallez can compare net revenue and decide the best option. A performance report will also assist Navallez as it will help to assess risk, cost, and industry comparisons. Navallez will be able to use income statements to compare and estimate profitability. In...
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...uillermo Furniture Store Analysis Week one individual paper was centered on Guillermo Furniture Store location, the production of work and the company finance. Week three individual paper will state three alternative measures for Guillermo Furniture Store working capital policy by weighting the average cost of capital, and by implementing multiple valuation techniques toward reducing the business risk. Business within Guillermo Furniture Store started to decline in the early part of 1900s. The effect of outside influences has opened up a new era of business for foreign competitors. The competitors have allowed their customers to crave the new technology of produced furniture by creating a lower price range. The simulation stated that housing were inexpensive, the location of business had mild weather, and beautiful scenery, along with uncongested roads a new International Airport and plenty of new development (University Of Phoenix, 2011). Alternatives To make a profitable decision the implementation of alternative needs to be considered. The three alternatives investment projects (the currently used approach, the high-tech approach, and the broker approach) needs to be categorized in a distinct order. The currently used approach consists of the company not changing their position, they will continue with their business lifestyle since the 1900s. High-tech alternative will allow the company to produce more custom furniture at a lower cost. The broker alternative...
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...Running head: Scenario: The Guillermo Furniture Store Scenario: The Guillermo Furniture Store The University of Phoenix Scenario: The Guillermo Furniture Store The purpose of this paper is explain how Guillermo could use budgets and performance reports in the decision making process. This paper will also cover how ethics might influence his accounting decisions. Another part of this paper will explain what accounting information is most relevant for Guillermo to consider when making decisions.. Guillermo will use budgets and performance reports in the decision making process to evaluate their performance for score-keeping purposes. The production data provided shows where Guillermo is spending the money. The flex budget tells Guillermo that they produced more mid-grade than actually budgeted and less high-end than actually budgeted. The labor time was more on the mid-grade than budgeted and the less than budgeted on the high-end. On the variance analysis for June, the net earnings was a loss. By pinpointing where actual results differ from plans, performance reports can show Guillermo how they are doing and where to take action. Guillermo can use the flex budget information as attention directing reporting. The setup information data can be used to decide how to handle future business whether to become a representative for the company in Norway and change his focus from manufacturing to distribution. By using these reports, Guillermo can focus on operating problems...
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...Guillermo Furniture Store Analysis Corporate Finance Dylan Lukens April 30, 2012 Guillermo Furniture Store Analysis The furniture store owned by Guillermo in Sonora, Mexico has operated a successful business creating custom furniture. As time went on Guillermo began to realize that other companies in the area had become interested in making furniture. The competition has forced Guillermo to consider alternatives within the Furniture Store. There are three alternatives to consider, which include going the high-tech route, being a broker, or continuing with his current model. Considering these alternatives means that a thorough analysis must be done to ensure the correct decision is made. The following will include and discuss a sensitivity analysis that will determine the optimal weighted average cost of capital (WACC) as well as calculating the net present value (NPV) of future cash flows for each alternative. As a manager of the furniture store the use of a capital budgeting techniques will be crucial. This includes a simple payback period, a discounted payback period and the net present value or NPV. The simple payback period method is the expected number of years required to recover from Guillermo’s original investment. When analyzing the incoming and outgoing cash flow it is clear that this occurred during year three of Guillermo Furniture. “Capital budgeting is fundamental because a firm is essentially defined by its assets and the products and services...
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...Guillermo Furniture Store Scenario NAME HERE ACC/561 DATE Guillermo Furniture Store Scenario Guillermo Navallez is a highly successful manufacturer of furniture in Sonora, Mexico; however, he is coming to the understanding that he no longer holds a competitive economic advantage that he once enjoyed in the past. The reason behind the lack of advantage is due in part to a new international competitor entering the market and challenging the current profit structure with furniture made from robotic production methods. Additionally, the cost of labor has proliferated and an influx of people migrating to Sonora, Mexico has altered the economic state within the area. Guillermo Navallez has several opportunities and alternatives to contemplate in an attempt to counterbalance the negative situations. Upon further analysis, Guillermo Navallez knew that a merger with another company is not a feasible option nor is expanding his management responsibilities as it would impede upon his desires to spend quality time with his family. These alternatives ultimately lead to him advancing his production system to a highly sophisticated laser lathe which would be rather expensive yet it would significantly decrease production costs. The other alternative would to become a representative for a Norwegian manufacturer who had been looking for channels to distribute in North America. Before settling on a permanent decision, Guillermo Navallez must first evaluate his current budget and performance...
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...Furniture Store Analysis Dechazlon Burnett, Basma Fawaz, Jon Ehm, Janice Schmitt, Jenna Snowden University Of Phoenix Accounting 561 Michael De Marco November 14, 2010 Introduction Gillermo Furniture Store Analysis Risks Associated with Sales Forecasts Sales forecasting and budgeting are important tools used to evaluate the results of the company. The sales forecasting are used as guidelines that direct the company to the right path and help the management achieve the company’s goals. The company may face many risks when forecasting or creating budget and this is related to unethical decision making. Sometimes mistakes occur either because of misrepresentation of numbers when creating a budget or because wrong decisions made by managers that aimed to increase income and resources. This will cause financial loss and failure to the company because the data used in the budget are inaccurate that will cause errors in the future numbers. According to Horngren, (2008) sales forecast is defined as, “a prediction of sales under a given set of conditions.” Forecasting is usually done using many techniques and the most important is based on data from past history to predict the future demand. The only error that may occur is that when there is a mistaken assumption in the past sales demand will continue into the future (Chase, 1993.) Guillermo Furniture store considers sales forecasting as a strong foundation to build the company’s sales budget. Guillermo recognizes the...
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...RUNNING HEAD: GUILLERMO FURNITURE STORE University of Phoenix Guillermo Furniture Store Guillermo Furniture Store Guillermo Furniture Store has undergone a major critical change within its industry. In order for this organization to stay focused there should be a change that can provide the organization with the best possible ambition to recap the profit and stability that the organization is use to. This paper will recap the cost relationship and behavior, management control systems that will help achieve Guillermo’s goals, also this paper will provide the break-even analysis for Guillermo’s current situation, and compute the Return on Investment. Cost Relationship and Behavior Cost relationships and behaviors can affect Guillermo’s decision making prerogatives for the manager. Cost behavior is defined as, “how the activities of an organization affect its costs” (Burgstahler, Horngren, Schatzberg, Stratton, and Sundem, 2008). Cost behavior consists of variable costs and fixed costs. Variable costs are, “costs that change in direct proportion to changes in the costs driver” (Burgstahler et al., 2008). Examples of variable costs for Guillermo are materials, equipment, and labor (Guillermo, 2009). Fixed costs are, “costs that is not immediately affected by changes in the cost-driver level” (Burgstahler et al., 2008). Examples of fixed costs for Guillermo are labor, utilities, taxes, and etc (Guillermo, 2009). Cost behavior can affect the choice of the process...
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...Guillermo Furniture Store Student Name Accounting/561 January 17, 2011 Professor Name Guillermo Furniture Store Guillermo has built a successful empire in the furniture business in the beautiful city of Sonora, Mexico. The reason behind his success is due to a large supply of timber that is available to him for producing a variety of tables and chairs. Furthermore, the labor costs for producing his furniture is relatively inexpensive, therefore, he is able to offer high quality furniture. It was smooth sailing for Guillermo’s business until the occurrence of two major events that changed everything. First, a competitor from overseas entered the furniture market offering rock bottom prices for furniture that is produced by a computer-controlled laser lathe to produce exact cuts in the wood. Second, the city of Sonora is suddenly experiencing a high influx of people due to what the city has to offer – beautiful scenery, no traffic, a new international airport, affordable housing, favorable weather, and lots of development. Competition and an increase in people and jobs resulted in a substantial increase in labor costs. Because of these unforeseen circumstances, Guillermo’s business suffers a lost in profit margins. With the occurrence of these sudden challenges, Guillermo must evaluate the situation and come up with the best possible solution so that his business will not only survive, but continue to flourish as it once did. He has a couple of options...
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...Capital Budget Recommendation Managerial Accounting and Legal Aspects of Business Introduction As requested by Mr. Guillermo Navallez, owner of the Guillermo Furniture Company, an analysis of existing investment opportunities will be presented through various capital budgeting evaluation techniques. Furthermore, a brief synopsis of how each method assists in determining the investment opportunity with the greatest return will be reviewed. A recommended course of action will be provided coupled with present value calculations to support this proposal. Capital Budget Evaluation Techniques Various analytical methods exist to help business owners make wise capital investment decisions. Because there are many evaluation methods, it makes good business sense to apply the various techniques to the same proposal in order to obtain multiple perspectives (Edmonds, 2007). The Net Present Value (NPV) method which takes the time value of money into consideration, is the capital budget technique which focuses on increasing the value of the business. Using Guillermo’s project data, the marginal cash inflows are defined as the increase in net cash inflows compared to the current situation. Since we know the depreciation formula under the high tech option has a projected useful life of ten years, this is the period used for this analysis. Calculations are as follows: Current Situation High-Tech Option Annual Net Income (Pretax) $46,118 Annual Net Income...
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...Ethical Influence Guillermo is also faced with ethical decisions as he arrives at this point of his business. He must account for all the financial data and mare sure they reflect the actual business. He can not focus on the short term goals and negate the larger picture . This can become and ethical dilemma later if he fails to accurate accounts the company’s financial status. Guillermo could risk a future bankruptcy is he fails to adjust the budget and margins as needed. Integrity plays a role in the decision making process. Integrity is not being measured in numbers but is indirectly related to the reporting of the financial standing of the business. Decision Making and Accounting Information During the decision making phase there is a need for analyzing different accounting figures. The key to determining the financial difference between alternatives is to identify the differential costs and revenues. (Horngren et al, 2008) The differential costs and revenues analysis is called incremental analysis. By examining all the relevant costs and revenues Guillermo can decide which alternative to choose and, therefore, to obtain the greatest contribution possible. The company will use the contribution to pay the unavoidable costs. The unavoidable costs will remain the same regardless of any decision, so the key is picking the alternative that will contribute the most toward paying off these costs. Depreciation, Expected revenue, and opportunity cost must all be assessed...
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