Guillermo_Furniture_Store_Scenario

Guillermo Furniture Scenario Amber L. Washington Accounting 561 Univertity of Phoenix Guillermo, a furniture maker has constructed one of a kind furniture designs for a number of years close to his Sonora, Mexico residence. This area also had a significant quantity of lumber for the variety of chairs and tables created by his business and in addition labor was inexpensive, and he priced his handcrafted goods at first-rate for the eminence they represented. In general, existence was great for Guillermo until the 1990s when new competitors entered the market pushing Guillermo to make some important decisions for the survival of his company. (University of Phoenix Guillermo Furniture Scenario). This document will identify how Guillermo can use budgets, performance reports, and how ethics can assist and influence him in his decision-making. Guillermo could use budgets and performance reports in his decision-making process by understanding what the actual cost and difference between the plan. Budget is planning and control tools for management and, in addition, helping to make proactive decisions about a business. Budget includes all revenues and expenditures and provides assistance with determination the spending guidelines for the manager as well as sets performance expectations. Guillermo can use budgets to compare his alternatives and carefully examine all avoidable and unavoidable costs. By pinpointing where actual results differ from plans, performance reports can show managers how they are doing and show the managers’ superiors where to take action (Horngren, Sundem, Stratton, Burgstahler, & Schatzberg, 2008). Guillermo can use the performance report to understand what improvements need to be made in order to stay relevant in the business. The performance reports have to be fair and prepared properly to ensure that the system is working effectively. Ethics influence Guillermo accounting decisions by maintaining a proper code within the company. Guillermo's ethical decision would be to reduce his current work staff and invest into new advanced technologies in order to adapt and overcome the new competitors, which have overwhelmed Guillermo's market of home furniture and regain a place within the competition. Guillermo must be able to have proper displays of how much money the furniture company is making and the cost in making the desired product. Management accountants have an ethical obligation to perform their duties in accordance with relevant laws and to refrain from engaging in or supporting any activity or practice that would discredit the profession (Horngren, Sundem, Stratton, Burgstahler, & Schatzberg, 2008). Guillermo must establish the relevancy of accounting information and determine how this data can be used in the making the proper business decisions for the furniture company’s future. Numerous important pieces of accounting data are important to make educated business decisions such as balance sheets, budgets, a current marketing analysis, and cash flow reports. Gathering information about the company’s current financial status, what amount of funds are available and how these assets will be used with the highest interest of the company such as purchasing new machinery, moving into the distribution market, or moving forward with the clear coat finishing production. Reviewing and monitoring the information and determining the relevant range of production for the company are essential for the ultimate success. Reference: Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2008). Introduction to management accounting (14th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. University of Phoenix. (2010). Guillermo Furniture Store Scenario. Retrieved February 17, 2011, from University of Phoenix, Week One, ACC 561 – Accounting.