MSA Comprehensive ExamSummer 2023
Day 2_Exam A
Please answer questions from two of the three courses.
Save your answer of each course in a separate file and name the file as
“ACC6xxx_YourFirstName YourLastName”.
Submit each of your responses to Canvas and email your responses to me at mkoo@cpp.edu.
Please include the file name in the subject line. Thank you and good luck!
ACC 6000 Business Valuation Using Financial Statement
By Dr. Nancy Fan
How Do You Conduct Business Valuation by Using Financial Statements?
ACC 6400 Management Accounting Seminar
By Dr. Hung Chan
San Diego Fashions. Inc. (SDF), a local company which uses a job-order normal costing system,
had two jobs in process at the start of 2023: job no. 101 ($168,000) and job no. 102 ($107,000). The
following information is available:
a) The company applies manufacturing overhead on the basis of machine hours. SDF has budgeted
31,800 machine hours to be used consistently in 2023. Data concerning machine hours and
manufacturing overhead incurred during 2022 follow.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Machine hours
3,800
3,600
2,300
2,050
2,200
2,400
2,000
2,800
2,600
2,100
2,200
2,400
MOH
$138,700
137,300
103,250
100,800
110,100
110,550
110,000
120,400
120,120
100,200
112,350
115,350
b) The company started/worked on four jobs during the first quarter of 2023. Direct materials used,
direct labor incurred, and machine hours consumed were as follows:
Job No.
101
102
103
104
Direct Material
$42,000
88,000
30,000
Direct Labor
$70,000
44,000
130,000
17,600
Machine Hours
?
2,400
3,000
2,000
c) Manufacturing overhead during the first quarter included charges for depreciation ($68,000),
indirect labor ($120,000), indirect materials used ($10,000), and other factory costs ($279,000).
d) San Diego Fashions completed job no. 101 and job no. 102. Job no. 101 was sold for $425,400
on account, reporting a gross margin of $19,400 for the firm.
Required (show your work to receive partial credit):
1) Based on SDF’s 2022 MOH cost data, what is your estimated monthly fixed MOH cost and
variable MOH cost per machine hours respectively? What cost behavior did the SDF’s 2022
MOH cost demonstrate?
2) What is your estimate of SDF’s 2023 budgeted MOH based on 2022 incurred MOH data?
Discuss two limitations of your estimate.
3) Determine the cost of jobs still in production reported on March 31 general ledger.
4) Assume SDF’s budgeted MOH was $1,406,000, how much was the manufacturing overhead
under- or overapplied for the first quarter of 2023? What would you recommend SDF to
account for the amount? Why? How would it affect your profitability analysis of the Job no.
101?
5) Should SDF use its 2023 budgeted MOH cost or its 2022 incurred MOH cost as a
benchmark to evaluate its managers’ performance in controlling 2023 MOH cost variance?
Why?
6) Can you recommend a better benchmark for MOH variance analysis and control? Explain a
pros of your recommended benchmark.
ACC 6900 Strategic Tax Planning
By Professor Mark Dunham
Question 1: Cal Poly Pomona, Inc., (“CPP”) owns a residential apartment complex consisting of 20
apartments. During the current tax year, CPP received the following amounts in connection with
the rental.
• $220,000 cash from rents, of which $35,000 represents late payments of from two year
ago rents and $30,000 for prepayments of next year’s rent;
• $10,000 of damage deposits on new rental leases (20% is nonrefundable, the remainder is
refundable if no damage exists at the end of the lease and is put in a separate escrow
account);
• $5,000 forfeited deposits on leases expiring in the current year that was held in a separate
escrow account (CPP expects to spend this amount in the near future on deductible repair
expenses.);
• $5,000 value of a collectible painting to CPP by a tenant in lieu of two months’ rent; and
• $5,500 value of improvements to an apartment left by a tenant at the end of the lease (as a
condition for constructing the improvements, CPP agreed to reduce the rent $500 for each
of the six months remaining on the lease).
How much must CPP report as gross rental income on its current year tax return assuming that
CPP uses (a) the cash basis and (b) the accrual basis?
Question 2: List the three types of tax authority and provide an example of each.
Question 3: Explain the wherewithal-to-pay concept and tax benefit rule, and how these concepts
sometimes override the financial accounting treatment of a particular item.
Question 4: Jack and Sally are debating whether to rent their personal residence while they
backpack through Europe later this year. They can rent their personal residence for 21 days at a
flat rate of $2,300/day to a single renter, or they can market the home through AirBnb and rent
the home for an average of $2,500/day but will only have a renter for 14 days. They incurred
$10,000 of interest expense and paid $5,000 in real estate taxes during the year. They are in the
20% tax bracket.
What advice would you give them regarding whether to rent for 14 days vs. 21 days? Support your
advice with calculations of the potential tax consequences of both options.
Question 5: Describe the concept of gift splitting and the annual gift exemption and how each of
these concepts can be effective tax planning tools for individuals.
Question 6: Describe the pros and cons of each of the following entity types. Include discussion on
the tax structure (such as double taxation vs. flow through taxation) and provide examples of basic
tax planning common for each entity type. Include discussion on whether there are there any nontax considerations that should also be considered when deciding which entity to operate as.
1) C Corporations
2) S Corporations
3) Partnerships/LLCs
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