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ACC_561r3_Guillermo_Furniture_Scenario - ACC/561 Accounting...

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ACC/561 Accounting Scenario: The Guillermo Furniture Store While many people recognize Sonora, Mexico as a beautiful vacation spot, it is also a large furniture manufacturing location in North America. Guillermo Navallez has made furniture for years near his Sonoran home. The area had a good supply of timber for the variety of tables and chairs produced by his company. Labor was also relatively inexpensive. In addition, he priced his handcrafted products at a slight premium for the quality they represented. Overall, life was good for Guillermo. Unfortunately for Guillermo, in the 1990s two events combined causing a large dent in his business. First, a new competitor from overseas entered the furniture market. Using a high-tech approach, this foreign competition provided furniture to exact specifications and did so with rock- bottom prices. Second, the sleepy communities in Sonora woke up as one of the largest retailers in the nation’s headquarters emerged nearby, and its influence had expanded considerably. With
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