Southern New Hampshire University 4-2 Activity: Cost-Benefit Analysis1

TAX 655 Module Four Activity Guidelines and Rubric

Scenario

Business entities are often looking at ways to identify tax incentives that benefit their companies. Cost-benefit analysis can be used to help determine the potential impact of changes a company is considering implementing.

You are a staff accountant who has calculated a cost-benefit for a client. You are putting together a cost-benefit analysis PowerPoint to present to your manager regarding the information on your client. Prepare a 3- to 4-slide PowerPoint to present your findings.

This activity will help you evaluate and explain the results of a cost-benefit analysis. This will help you with Project Two, where you will make recommendations for optimal tax planning strategies.

Cost-Benefit Formula

Total benefits from the project = Increase in revenue from expansion

• Revenue increase + Additional revenue increase = Total benefits

Costs

• New employee salary + Hiring expense + Technology costs (hardware and software) = Total costs

Cost-benefit ratio

• Total benefits / Total costs = Cost-benefit ratio

Directions

Create a PowerPoint presentation with speaker notes of your cost-benefit analysis based on the provided client information. You will present this to your manager. Read the provided scenario and Excel spreadsheet with calculations completed. Additionally, use the Shapiro Library Accounting Resources Guide and research current tax laws to consider how they apply to the cost-benefit analysis. Specifically, you must address the following:

1. Explain the impact of estimated costs and benefits on this company. Consider the following in your response:
   1. Explain the details of the estimated costs
   2. Determine the potential benefits
2. Summarize the goal of reducing the tax liability. Consider the following in your response:
   1. Identify the tax effect of implementing the incentive
   2. Consider if the tax savings will continue to future years
3. Evaluate the results of the cost-benefit analysis. Consider the following in your response:
   1. Consider what the company may gain from this analysis
   2. Provide recommendations on the next steps for the company