Southern New Hampshire University
Module 8 Homework
Marissa Snyder
If management decides to implement a reduction in workforce, what types of reports might they use to make the decision of where to cut? What issues might arise due to this reduction?
When thinking about a reduction in workforce, the first thing that needs to happen is to determine all do the costs that are directly related to each individual employee. Some reports that they might use to be able to calculate this is an employee cost rollup and an employee cost rollup with overhead. The next thing that needs to be considered is the amount of revenue that each of those employees bring the company. With that aspect, some reports that might be used are the employee profitability calculation
Some issues that might arise due to this reduction in the workforce include severance packages, accrued vacation, stock grant acceleration, unemployment insurance, and potential lawsuits. Workforce reduction does cut costs for the company initially, but when thinking about all of the things considered when laying people off, it could create more costs than were incurred by keeping them employed.
Management has told you that they want to reduce total costs of operations and SG&A by 10%. What types of reports would you look at to make these decisions?
The first report that I would look at to make these decisions would be an spend analysis report. This report would be able to show all of the costs incurred for operations and SG&A. It would also be able to tell you about how much suppliers are charging the company for their materials. Another report that would be useful is the workforce reduction report because it will be able to tell you the costs of each individual employee and what percentage of profit they generate for the company. If you have an employee who is being paid the maximum salary but isn't producing enough for the company, that is somewhere that the company can cut costs.
Define the term "tax strategy." Name at least two common tax strategies.
In simple terms, tax strategy is the objective of minimizing the amount of cash that is paid out for taxes Two common tax strategies are to:
1. Take all available tax credits: tax credits are extremely hard to find but when you find one, it
results in a permanent reduction in taxes which is highly desirable for a company. 2. Accelerate deductions: if a company can recognize expenses earlier, they can force them to be reported in the current year instead of recognizing them the following year. A common deferral is depreciation because it is a yearly cost, and if done with the straight-line method, it could be easy to predict.
Southern New Hampshire University
What is the difference between book and tax accounting? Does taxable income always equal book income? Why or why not?
There are three key differences between book and tax accounting:
1. Income and expenses specifically excluded for tax purposes