CBS Cost Accounting & Management 2

Question 1

In a bankruptcy reorganization, which cost behavior classification is most critical when projecting whether a debtor can service post-confirmation obligations?

Accepted Answer

Fixed vs. variable cost structure

Answer

Understanding fixed versus variable costs allows the trustee and court to project break-even points and sustainable cash flows under the reorganization plan.

Question 2

A company in Chapter 11 uses job-order costing. Under-applied overhead at year-end is typically disposed of by:

Accepted Answer

Adjusting Cost of Goods Sold or allocating among WIP, Finished Goods, and COGS

Answer

Under-applied overhead is normally closed to Cost of Goods Sold or prorated among WIP, Finished Goods, and COGS based on relative balances.

Question 3

A debtor's contribution margin ratio is 35% and fixed costs are $700,000. What is the break-even sales level?

Accepted Answer

$2,000,000

Answer

Break-even sales = Fixed Costs ÷ CM Ratio = $700,000 ÷ 0.35 = $2,000,000.

Question 4

Which costing method assigns only variable manufacturing costs to products and treats fixed overhead as a period cost?

Accepted Answer

Variable (direct) costing

Answer

Variable (direct) costing includes only direct materials, direct labor, and variable overhead in product cost, expensing fixed overhead immediately.

Question 5

In assessing a bankrupt manufacturer, the CBS specialist finds that direct labor is $30/unit, direct materials $50/unit, variable overhead $10/unit, and fixed overhead is $200,000 for 10,000 units. What is the absorption cost per unit?

Accepted Answer

$110

Answer

Absorption cost = $30 + $50 + $10 + ($200,000 ÷ 10,000) = $30 + $50 + $10 + $20 = $110.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Cost Accounting & Management 2