...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 Concepts Paper Guillermo Furniture Store Concepts Paper Many businesses face circumstances that require concepts and principles. There are many principles that should be applied to running a good business. Competitors are looking for the competition and as a business person one cannot expect the other party to be economically rational with the competition (Emery, Finnerty, & Stowe, 2007). The Guillermo Navallez owner of Guillermo Furniture Store located in Sonora, Mexico has been in business for years making furniture with a good supply of timber for the variety of tables and chairs, relatively inexpensive labor prices, and its handcrafted products, is known as one of the largest furniture manufacturing stores in North America. In the late 1990’s the furniture store took a shocking turn due to the competition from overseas that entered the business using a high tech approach causing a decrease in Guillermo’s business. In addition, Guillermo watched how his competitor woke up the community from its rock-bottom prices, and how one of the largest retailers in the nation’s headquarters down the road influenced and expanded considerably which raised the cost of labor substantially causing Guillermo’s profit margin to shrink as prices fell and costs rose (University of Phoenix, 2009). Guillermo is now faced with making some decisions to help his business. Guillermo should be wise about his decisions. It may be hard to swallow...
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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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...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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...Being a small business with many competitors Guillermo will be able to use budgets and performance results in several different ways. The first opportunity that budgets and performance reports have is to help Guillermo make choices. These choices can lead to whether Guillermo can afford or need the added machinery that he is now considering. Guillermo’s has to ensure that his accounting decisions ensure he does not end up in a ethical dilemma. How could Guillermo use budgets and performance reports in his decision-making process? Budget: A budget can be a great tool for Guillermo to use. With this budget Guillermo can identify all of his cost. Guillermo will be able to track how much labor it takes to produce each of his products as well as the cost per unit. This will help Guillermo identify his budget and find different ways to cut cost to increase his revenue. Once he has been able to identify his cost as well as the opportunities to cut cost Guillermo can Identify the need if any for new machinery Performance Reports Performance reports provide feedback by comparing results with plans and by highlight variances. Performance reports can help with Guillermo decision making by identifying the expected profit of the business. The performance report can show what would happen if he decides to user a cheaper product for his coating whether it would increase his revenue and lower the quality of his product. Performance reports will also show how he measures with...
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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 Accounting 561 University of Phoenix Introduction The business climate has changed dramatically for Guillermo Furniture over the last 10-15 years. The market share that was once seen in Sonora Mexico has now shrunk and has increased competition. The company must look to reduce cost while at the same time making a profit. The company has several options and ideas on the table, but Guillermo needs to look at the financial documentation to make sound business decisions. Guillermo Furniture has not done the best job of looking at the data and creating a business and production plan for the company. With increased competition and also the influx of machine cut furniture, the market for his product has been reduced over the years. The company must decide soon to keep things as they are, or spend the money needed to buy the appropriate machinery to produce the high quality products they desire. Although the machinery will be expensive from the start, they would eventually pay for themselves over time on the amount of labor saved. There has also seemed to be a lack of budgets and performance reports in the decision-making process. The company could use these reports in many areas to keep the company making profit, as well as shift the company in the proper direction for the future. One thing that can be taken away from the current data is that the company produced over budget on its mid-grade products, while failing to meet the...
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...Guillermo Furniture Store Financial Concepts FIN 571 Abstract This paper will give a description of the financial principles; compare the accounting net income, cash flows, and the market value of Guillermo Furniture Store. This scenario provides an opportunity to in developing a financial plan for Guillermo to compete in an economic environment. This paper will provide information on some ethical and moral decisions that Guillermo can use to become competitive with companies in the furniture business. Business ethical and moral decisions should be used when a company is competing with another company to establish a reputable reputation for obtaining customers growth. The Financial principles and the market will give companies an opportunity to become competitive. The Guillermo’s scenario demonstrates how new completion from overseas can present a challenge that could put a company in financial crisis. Financial principles entail behaviors of financial transitions and guidance in decisions for making new technology to customize new products faster and efficient. Guillermo is noticing that completion is coming to his own community and realizes that this could become an economic disaster. Because of interest in financial-decision making can lead to rational decision - making, Guillermo will need to reestablish its position to meet the challenges from companies abroad. Immediate Financial decisions is necessary to become a competitor. Guillermo has the advantage in...
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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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...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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...add value to a business’ products as well as economic efficiency. Further, the paper attempts to develop a financial plan for Guillermo to enable it to competitive in its respective furniture market. Guillermo’s Furniture Store: Financial Principles Guillermo’s Furniture Store offers a convenient case study essential for analysis of financial principle concepts within a competitive economic setting. Among the financial concepts appreciable within the context of the set-up include financial markets, financial principles as well as business ethics that form the basis from which financial decisions are made. Guillermo’s Furniture Store case study divulges how the entry of a new competitor from abroad has triggered unexpected challenges to the financial situation of the business. Previously, Guillermo furniture store seem to benefitted from a form of monopoly advantage, resulting from its seemingly popular brand name, non-competitive market conditions and cheap labor in Sonora. This was until the entrance of the new entrants into the local market. Competitors use technology to boost their competitive advantage, in which case they add value to their services to attract customers as well as retain them (Emery, Finnerty & Stowe, 2007a). In view of the fact that financial self-interest is aimed at guiding businesses towards balanced supervisory decisions, it appears the furniture store is compelled to reassert its position if they have to...
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...Introduction Guillermo Furniture Store is a furniture manufacturer in Sonora, Mexico who faces competition who are putting a dent in his business with more modern equipment lowering production costs hurting his profit margins and lowering prices. The principles of finance describe typical behavior in financial transactions and provide guidance for decision making. Financial Self Interest guides rational decision making Guillermo has to make decisions based on the fact money is not everything. There is a balance of work and life. He has chosen not to acquire any companies since it would take time away from his family. Many financial decisions must consider the time value of money The furniture store has to consider that a dollar today is worth more than a dollar tomorrow. The time value of money derives from the opportunity to earn interest on it. Simply stated, the time value of money is how much it costs to “rent” money. Emery Finnerty Stowe All Transactions have at least two sides, with each party considering their self interest Most transactions are Zero-Sum where one party gains only at the other party’s expense. In this case Guillermo must negotiate the terms and conditions that are favorable to the growth of his furniture business if he goes into partnerships with competitors or foreign distributors. Incremental costs and benefits are the basis for choices among alternatives. Guillermo must weigh the cons and pros of staying current, going high tech or becoming...
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...Guillermo Furniture Store Analysis FIN 571 May 20, 2012 Guillermo Navallez has had a very successful furniture business in Sonora, Mexico. Lately, however, the retail environment has changed. Competition has moved in to the area, and labor costs have risen. This has caused Guillermo’s profits to decrease significantly. Guillermo now needs to research options for his business, in order to stay competitive in the market. One option would be to purchase automated equipment that would make his furniture precisely as he designed, and significantly reduce his labor costs. The other option would be to become a distributor to a furniture company in Norway, and sell both his own, and the other company’s products. This paper will analyze the different options available to Guillermo, and the financial outcomes of each alternative. It will determine the Weighted Average Cost of Capital, as well as the multiple valuation techniques of the available options, and make a final recommendation as to which alternative Guillermo should explore. While weighing his decision, Guillermo must analyze the income potentials for each alternative at the current production rate, and at another lower rate, to ensure he would be able to stay in business in the demand for his products dropped. It is not realistic to only look at one rate, as business cycles tend to rise and fall, and Guillermo needs to be able to ride the highs and lows of the retail market, and be able to keep his business. ...
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...Critical Thinking Application Guillermo Avila University Of Phoenix Jose Rodriguez August 29, 2011 Critical Thinking Application A question is always present from the beginning of modern age: How do I adapt? Mankind activities have been centered in technology, life improving, marketplace, environmental protection, business and global economy, international politics, and a variety of situations with a background impossible to define because of the constant changes in the everyday life. This instability brings difficulties to make decisions in a long run, affecting people as individuals and as part of the community. Making decisions based on emotions or intuitions seems the fastest and easiest way rather than gathering the information from different sources, making analysis, and reach the right conclusions. The right process, the main purpose of this paper intends to define: The critical thinking, including an example where critical thinking can be applied, and remarking the importance and the benefits of critical thinking in de decision-making process. By definition, critical thinking is a process of examination of one’s thinking taking control of thoughts and tracing a way to assess any situation and create objective decisions. Studying and practicing critical thinking develop the ability to think more effectively, more rational, and more objective, and through the proper analysis exercises reaching clarity, relevance, accuracy, depth, logicalness, and breadth (Paul...
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...Guillermo Furniture Store Scenario Accounting is a daily function in many areas in our lives. Whether it is budgeting in our homes, or business, accounting services are useful and necessary. Guillermo Navallez has a very successful furniture business near his home in Sonora, Mexico. In the 1990’s Guillermo’s business was facing new competition. Rising costs and falling prices were causing Guillermo’s profit margin to shrink (University of Phoenix Guillermo Furniture Store Scenario, 2011). In this paper discussion topics will include how Guillermo can use budget and performance reports in his decision-making process, how ethics can play a role in the process, and relevant accounting information in the decision-making process. Budget Reports Budget reports help control spending. The definition of a budget is “quantitative expression of a plan of action” (Horngren, Sundem, Stratton, Burgstahler, and Schatzberg, 2008). Using a budget report, Guillermo can keep track of all business expenditures. The budget report can also reflect if there is any excessive or wrongful spending. Budget reports are also relevant accounts for business earnings based on product sales. Guillermo can have an idea of which products are best sellers versus those products that are not doing so well allowing him to make any necessary adjustments to his inventory. Performance Reports “Performance reports provide feedback by company results with plans and by highlighting variances, which are deviation...
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