Balance and Performance of Gauillermo

Essay by pugdaddy57University, Master'sA, June 2010

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Balance and Performance Of Gauillermo

For this paper is for the purpose of evaluating the Guillermo Furniture store scenario. During this evaluation I will cover budget and performance reports, ethics and what accounting information they may find relevant to their business. I will first begin with a brief description of Guillermo and the situation they are in I will then address the above issues as they have been noted above.


Guillermo Furniture is owned by Guillermo Navallez and is located in Sonora, Mexico. In the past they have been very successful in their business. Recently a new international competitor has entered the market and a large retailer has opened a facility in the community this has caused a dent in his business and he has been faced with falling prices and rising cost. He has researched his options and knows that a merger is something he would not be willing to take on.

He does have three other options to consider; one is converting his production to a high tech laser lathe which would be expensive but could cut down his production cost; two and becoming a representative for another furniture manufacturer out of Norway, and three concentrating on his already patented process for creating a coating for his furniture.

Budget and Performance:

During the decision process Guillermo must look at the existing budget. A budget is basically a quantitative expression on a plan of action that is used to coordinate and implement plans where the performance report provides feedback by comparing results with the plan by pointing out variances, which are deviations from what was, planned (Horngren). Guillermo could use the projected information to evaluate labor hours and production values to assess the profits if he would decide to sell coated furniture. The information produced from the budget...