WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 1 of 150
A company's current ratio is 2.5, and its quick ratio is 1.2. If the company issues additional short-term debt to
purchase inventory, which of the following is most likely to occur?
A. Both ratios will increase.
B. Both ratios will decrease.
C. Current ratio will decrease, quick ratio will remain unchanged.
D. Current ratio will increase, quick ratio will decrease.
PREVIOUS CONTINUE
A company's current ratio is 2.5, and its quick ratio is 1.2. If the company issues additional
short-term debt to purchase inventory, which of the following is most likely to occur?
A. Both ratios will increase.
(Correct) B. Both ratios will decrease.
C. Current ratio will decrease, quick ratio will remain unchanged.
D. Current ratio will increase, quick ratio will decrease.
Correct Answer: B
Issuing short-term debt increases current liabilities, while inventory purchase increases current assets equally.
The current ratio (CA/CL) will decrease because the proportional increase in CL is larger when the ratio is
above 1. The quick ratio ((CA-Inventory)/CL) will also decrease because inventory is excluded from quick
assets, so CA increases but quick assets do not, while CL increases, reducing the ratio.
Page 1 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 2 of 150
A manufacturing firm uses a standard costing system. For a given period, the direct materials price variance is
$5,000 unfavorable, and the direct materials quantity variance is $3,000 favorable. The actual quantity of
A. The company purchased higher-quality materials at a higher price, resulting in less waste.
B. The company used inferior materials, leading to lower purchase price but higher usage.
C. The company's purchasing department negotiated a lower price, but production experienced inefficiencies.
D. The company's standards were set too tight for both price and quantity.
PREVIOUS CONTINUE
A manufacturing firm uses a standard costing system. For a given period, the direct
materials price variance is $5,000 unfavorable, and the direct materials quantity variance
is $3,000 favorable. The actual quantity of materials used was 10% less than the standard
quantity allowed for actual output. Which of the following is the most plausible
explanation?
(Correct) A. The company purchased higher-quality materials at a higher price, resulting in less
waste.
B. The company used inferior materials, leading to lower purchase price but higher usage.
C. The company's purchasing department negotiated a lower price, but production experienced
inefficiencies.
D. The company's standards were set too tight for both price and quantity.
Correct Answer: A
An unfavorable price variance indicates higher actual price than standard, while a favorable quantity variance
indicates less usage than standard. Using higher-quality materials (more expensive) that reduce waste (less
quantity used) aligns with both variances. Option B would produce opposite variances (favorable price,
unfavorable quantity). Option C would produce favorable price and unfavorable quantity. Option D would not
explain the combination.
Page 2 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 3 of 150
In a capital budgeting analysis, a project with a positive net present value (NPV) is rejected by a manager who
relies solely on the internal rate of return (IRR) because the IRR is less than the cost of capital. Which of the
A. The project has non-conventional cash flows with multiple IRRs.
B. The project has a very long payback period.
C. The project's cash flows are all positive after the initial investment.
D. The cost of capital is lower than the IRR.
PREVIOUS CONTINUE
In a capital budgeting analysis, a project with a positive net present value (NPV) is
rejected by a manager who relies solely on the internal rate of return (IRR) because the
IRR is less than the cost of capital. Which of the following scenarios could explain this
discrepancy?
(Correct) A. The project has non-conventional cash flows with multiple IRRs.
B. The project has a very long payback period.
C. The project's cash flows are all positive after the initial investment.
D. The cost of capital is lower than the IRR.
Correct Answer: A
For projects with non-conventional cash flows (e.g., alternating signs), the IRR may produce multiple values or
be misleading. A positive NPV indicates the project adds value, but if the IRR is less than the cost of capital,
this conflict suggests the IRR is not reliable. Option B does not cause NPV-IRR conflict. Option C would
typically yield IRR > cost of capital if NPV positive. Option D contradicts the scenario.
Page 3 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 4 of 150
A company has a degree of operating leverage (DOL) of 3 at its current sales level of 10,000 units. If the
company expects a 10% increase in sales, what is the expected percentage change in net operating income?
A. 3.33%
B. 10%
C. 30%
D. 33.33%
PREVIOUS CONTINUE
A company has a degree of operating leverage (DOL) of 3 at its current sales level of
10,000 units. If the company expects a 10% increase in sales, what is the expected
percentage change in net operating income?
A. 3.33%
B. 10%
(Correct) C. 30%
D. 33.33%
Correct Answer: C
DOL = % change in net operating income / % change in sales. Given DOL = 3 and sales increase = 10%, the %
change in net operating income = 3 * 10% = 30%. Option A incorrectly divides 10% by 3. Option B ignores
leverage. Option D misapplies the formula.
Page 4 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 1 of 150
A company's current ratio is 2.5, and its quick ratio is 1.2. If the company issues additional short-term debt to
purchase inventory, which of the following is most likely to occur?
A. Both ratios will increase.
B. Both ratios will decrease.
C. Current ratio will decrease, quick ratio will remain unchanged.
D. Current ratio will increase, quick ratio will decrease.
PREVIOUS CONTINUE
A company's current ratio is 2.5, and its quick ratio is 1.2. If the company issues additional
short-term debt to purchase inventory, which of the following is most likely to occur?
A. Both ratios will increase.
(Correct) B. Both ratios will decrease.
C. Current ratio will decrease, quick ratio will remain unchanged.
D. Current ratio will increase, quick ratio will decrease.
Correct Answer: B
Issuing short-term debt increases current liabilities, while inventory purchase increases current assets equally.
The current ratio (CA/CL) will decrease because the proportional increase in CL is larger when the ratio is
above 1. The quick ratio ((CA-Inventory)/CL) will also decrease because inventory is excluded from quick
assets, so CA increases but quick assets do not, while CL increases, reducing the ratio.
Page 1 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 2 of 150
A manufacturing firm uses a standard costing system. For a given period, the direct materials price variance is
$5,000 unfavorable, and the direct materials quantity variance is $3,000 favorable. The actual quantity of
A. The company purchased higher-quality materials at a higher price, resulting in less waste.
B. The company used inferior materials, leading to lower purchase price but higher usage.
C. The company's purchasing department negotiated a lower price, but production experienced inefficiencies.
D. The company's standards were set too tight for both price and quantity.
PREVIOUS CONTINUE
A manufacturing firm uses a standard costing system. For a given period, the direct
materials price variance is $5,000 unfavorable, and the direct materials quantity variance
is $3,000 favorable. The actual quantity of materials used was 10% less than the standard
quantity allowed for actual output. Which of the following is the most plausible
explanation?
(Correct) A. The company purchased higher-quality materials at a higher price, resulting in less
waste.
B. The company used inferior materials, leading to lower purchase price but higher usage.
C. The company's purchasing department negotiated a lower price, but production experienced
inefficiencies.
D. The company's standards were set too tight for both price and quantity.
Correct Answer: A
An unfavorable price variance indicates higher actual price than standard, while a favorable quantity variance
indicates less usage than standard. Using higher-quality materials (more expensive) that reduce waste (less
quantity used) aligns with both variances. Option B would produce opposite variances (favorable price,
unfavorable quantity). Option C would produce favorable price and unfavorable quantity. Option D would not
explain the combination.
Page 2 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 3 of 150
In a capital budgeting analysis, a project with a positive net present value (NPV) is rejected by a manager who
relies solely on the internal rate of return (IRR) because the IRR is less than the cost of capital. Which of the
A. The project has non-conventional cash flows with multiple IRRs.
B. The project has a very long payback period.
C. The project's cash flows are all positive after the initial investment.
D. The cost of capital is lower than the IRR.
PREVIOUS CONTINUE
In a capital budgeting analysis, a project with a positive net present value (NPV) is
rejected by a manager who relies solely on the internal rate of return (IRR) because the
IRR is less than the cost of capital. Which of the following scenarios could explain this
discrepancy?
(Correct) A. The project has non-conventional cash flows with multiple IRRs.
B. The project has a very long payback period.
C. The project's cash flows are all positive after the initial investment.
D. The cost of capital is lower than the IRR.
Correct Answer: A
For projects with non-conventional cash flows (e.g., alternating signs), the IRR may produce multiple values or
be misleading. A positive NPV indicates the project adds value, but if the IRR is less than the cost of capital,
this conflict suggests the IRR is not reliable. Option B does not cause NPV-IRR conflict. Option C would
typically yield IRR > cost of capital if NPV positive. Option D contradicts the scenario.
Page 3 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
, WGU C213 Accounting for Decision Makers
Objective Assessment Exam
2026 Exam · 150 Questions · With Rationales
ati. WGU C213 Accounting for Decision Makers Objective Assessment Exam
Question: 4 of 150
A company has a degree of operating leverage (DOL) of 3 at its current sales level of 10,000 units. If the
company expects a 10% increase in sales, what is the expected percentage change in net operating income?
A. 3.33%
B. 10%
C. 30%
D. 33.33%
PREVIOUS CONTINUE
A company has a degree of operating leverage (DOL) of 3 at its current sales level of
10,000 units. If the company expects a 10% increase in sales, what is the expected
percentage change in net operating income?
A. 3.33%
B. 10%
(Correct) C. 30%
D. 33.33%
Correct Answer: C
DOL = % change in net operating income / % change in sales. Given DOL = 3 and sales increase = 10%, the %
change in net operating income = 3 * 10% = 30%. Option A incorrectly divides 10% by 3. Option B ignores
leverage. Option D misapplies the formula.
Page 4 | WGU C213 Accounting for Decision Makers Objective Assessment Exam 2026
