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 (Horngren, Sundem, Stratton, Burgstahler, and Schatzberg, 2008, p. 13). In GFS's case it is important to use the budget and performance reports for each of the three major alternatives. The information will provide the current financial state of the company. An analysis of each alternative will determine effect on assets, liabilities, and equity of the company. The analysis will point out