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Gene One Problem Solution

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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 company’s future to stay competitive in the furniture market. Decision Making process Guillermo decision making process will start with the company’s budgets and performance reports and find ways to cut production cost and increase profits if the company is to stay in the furniture market. After Guillermo has reviewed his budget analysis he will be able to coordinate and implement a plan. By using the budget analysis, Guillermo will be able to make better decisions based on the outflow and inflow of assets. The company will also use the budget to see if they can make the decisions to invest in new machinery and to see if it would be beneficial to their company. Guillermo will have to consult with his accountant and do more research and find what information is relevant, Guillermo will need to get the accountant’s advice on the financial aspect of the business from a legal stand point (Hormgrem, Charles 2008). Ethics Influence Accounting As Guillermo starts to discuss his strategy plan with the accountant, he will have to consider the ethics that are involve with accounting when making key decisions that will affect the company. Ethics will influence Guillermo’s accounting decisions in many ways if he decides to put a budget together for the hi-tech machinery which will be a decision making process. Also during the process he will have to be honest and present his debt equity even if it is not favorable and also show his profits if he is to go head and purchase the hi-tech equipment. There are other variables Guillermo will take, he will have to go back to the budget and performance reports in how the company will perform under these new changes, the reports will enable Guillermo to forecast and predict if their profits would increase and production and sales would increase. Conclusion For the last few years Guillermo the owner of a Furniture store has made significant profits and inexpensive labor in his home town called Sonora, Mexico. Guillermo’s team and accountant will have to put a strategy plan together to compete with the new competitor from overseas who has entered the furniture business in Sonora, Mexico. The most important and essential thing Guillermo will have to do during the decision making process is to utilize their budget and performance reports to determine if it makes good business sense to buy new equipment to be able to compete with the competition or even enter into the distribution part of the business. After viewing the reports and putting a plan together they will have to have a discipline management team to follow through. Also Guillermo team will have to explore all ethic resources when it comes to the financial part of the business (accounting). Accounting will play a major part in determining a method of relevant cost known as the relevant cost approach. It will also be use to find the best alternative cost if they are to pursue a new business venture are add to the existing business. Guillermo will have to be true when exploring his options with the accounting aspect of the business in what every direction he pursues.

References
Hormgrem, Sundem, Stratton, Burgstahler and Schatzberg (2008). Introduction to Management Accounting (ed. 14). Hall, Prentice.

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