Explore BrainMass

Guillermo Furniture Store Scenario

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

- Resource: Guillermo Furniture Store Scenario
- Read the Guillermo Furniture Store Scenario.

o How could Guillermo use budgets and performance reports in his decision-making process?
o How might ethics influence his accounting decisions?
o What accounting information is most relevant for Guillermo to consider when making decisions?

- Format your paper according to APA standards.

© BrainMass Inc. brainmass.com October 17, 2018, 12:45 am ad1c9bdddf


Solution Preview

? Resource: Guillermo Furniture Store Scenario
? Read the Guillermo Furniture Store Scenario.
o How could Guillermo use budgets and performance reports in his decision-making process?
Guillermo has to made a decision about selecting one of the three options. The first option is to continue with the current production, the second option is to go in for the latest technology, and the third option is that Guillermo should become a distributor and should market the products of another manufacturer.
Budgets can help Guillermo make a decision because it is a list of planned expenses and revenues. What Guillermo needs to do is to prepare planned expenses and revenues for each of the options and use the results to decide which the best alternative is for him. The budget also represents th plan for saving and spending. Each of the three option has different plans for revenues and expenses. If we look at the Income information we find that each of the options has different net margins, different overheads and net income. Also each option has different requirements for cash investment. For instance, going hi-tech requires a high level of cash ...

Solution Summary

Guillermo Furniture Store Scenario is discussed very comprehensively in this explanation..

Similar Posting

Guillermo Furniture Scenario: Capital Budget Recommendations

Guillermo Furniture, a company that manufactures mid-grade and high-end sofas, has just hired you as an accountant. The owner, Guillermo Navallez, has assigned you the tasks of determining which decisions provide the greatest returns. Review the Guillermo Furniture data sheets (attached).

The Guillermo Furniture Store Scenario:
Guillermo Navallaz is the proud owner of Guillermo?s Furniture Store located in Sonora, Mexico. He chose this area because of its excellent supply of timber for the variety of tables and chairs produced by his company. Business was going well until the late 1990s? when two events caused a decline in Guillermo?s business. First, a new overseas competitor entered the Sonora furniture market with their high-tech approach that provided furniture to exact customer specifications at low prices. The second event was that the community of Sonora began to grow. The increase of people and jobs raised the cost of labor significantly and Guillermo experienced shrinking profit margins as prices fell and costs rose (University of Phoenix, 2011).

In order for Guillermo to increase his profits, maintain his market share, and have an advantage over his competitors, he must look at alternative projects to improve business. The object of this paper is to make a recommendation for Guillermo to follow based on the financial analysis of the data presented and to evaluate three alternatives for Guillermo to consider. Once a course of action for Guillermo to follow is agreed upon, the team will analyze the financial data to support their recommendation, which will address the issue of foreign competition and labor cost.

The analysis will focus on how the alternative chosen will help Guillermo increase profits over the next five years and lower all the costs involved in producing or distributing the furniture. The paper includes a Cash Flow Budget, including assumptions, which will be based on the projected sales and expense budget for the year and any capital investments the company projects over the next five years.

- Obtain the number that is shown as a result for total assets on the assets, liabilities, and equity.
- Differentiate among the various capital budget evaluation techniques.
- Explain how these different techniques would help you make your recommendation to Guillermo.
- The cost of the asset is in the depreciation and please use 10% as the return rate. Recommend a course of action based on a capital budget evaluation technique and include present value calculations as part of your recommendation.

View Full Posting Details