WGU D196 Manufacturing Costs and Inventory Flow
Certification Exam Questions and Correct Answers
(Verified Answers) Plus Rationales 2026 Q&A | Instant
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1. Which of the following best describes a manufacturing cost?
A. Costs associated only with selling products to customers
B. Costs incurred to produce goods for sale
C. Costs related only to administrative activities
D. Costs paid to shareholders
Answer: B. Costs incurred to produce goods for sale
Rationale: Manufacturing costs are the costs directly associated with
producing goods. They include direct materials, direct labor, and
manufacturing overhead. Selling and administrative costs are
considered period costs rather than manufacturing costs.
2. Which of the following is classified as a direct material?
A. Factory electricity
B. Factory supervisor salary
,C. Wood used to manufacture furniture
D. Advertising expense
Answer: C. Wood used to manufacture furniture
Rationale: Direct materials are raw materials that can be physically
traced to a finished product. Wood used in furniture production is
directly identifiable with the product.
3. Direct labor consists of:
A. Salaries of sales employees
B. Wages paid to workers who directly manufacture products
C. Administrative salaries
D. Depreciation on office equipment
Answer: B. Wages paid to workers who directly manufacture products
Rationale: Direct labor includes wages paid to employees who
physically transform raw materials into finished goods, such as
assembly-line workers.
4. Which cost is included in manufacturing overhead?
,A. Direct materials
B. Direct labor
C. Factory insurance
D. Sales commissions
Answer: C. Factory insurance
Rationale: Manufacturing overhead includes all manufacturing costs
other than direct materials and direct labor. Factory insurance, utilities,
and depreciation are common examples.
5. The three major components of manufacturing costs are:
A. Materials, labor, and overhead
B. Marketing, sales, and administration
C. Assets, liabilities, and equity
D. Revenue, expenses, and dividends
Answer: A. Materials, labor, and overhead
, Rationale: Manufacturing costs consist of direct materials, direct labor,
and manufacturing overhead. Together, these costs determine the cost
of producing inventory.
6. Which inventory account represents products that are completed but
not yet sold?
A. Raw materials inventory
B. Work-in-process inventory
C. Finished goods inventory
D. Merchandise inventory
Answer: C. Finished goods inventory
Rationale: Finished goods inventory includes completed products
awaiting sale to customers.
7. Raw materials inventory includes:
A. Completed products ready for customers
B. Materials purchased for production but not yet used
C. Products currently being assembled
D. Goods returned by customers
Certification Exam Questions and Correct Answers
(Verified Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following best describes a manufacturing cost?
A. Costs associated only with selling products to customers
B. Costs incurred to produce goods for sale
C. Costs related only to administrative activities
D. Costs paid to shareholders
Answer: B. Costs incurred to produce goods for sale
Rationale: Manufacturing costs are the costs directly associated with
producing goods. They include direct materials, direct labor, and
manufacturing overhead. Selling and administrative costs are
considered period costs rather than manufacturing costs.
2. Which of the following is classified as a direct material?
A. Factory electricity
B. Factory supervisor salary
,C. Wood used to manufacture furniture
D. Advertising expense
Answer: C. Wood used to manufacture furniture
Rationale: Direct materials are raw materials that can be physically
traced to a finished product. Wood used in furniture production is
directly identifiable with the product.
3. Direct labor consists of:
A. Salaries of sales employees
B. Wages paid to workers who directly manufacture products
C. Administrative salaries
D. Depreciation on office equipment
Answer: B. Wages paid to workers who directly manufacture products
Rationale: Direct labor includes wages paid to employees who
physically transform raw materials into finished goods, such as
assembly-line workers.
4. Which cost is included in manufacturing overhead?
,A. Direct materials
B. Direct labor
C. Factory insurance
D. Sales commissions
Answer: C. Factory insurance
Rationale: Manufacturing overhead includes all manufacturing costs
other than direct materials and direct labor. Factory insurance, utilities,
and depreciation are common examples.
5. The three major components of manufacturing costs are:
A. Materials, labor, and overhead
B. Marketing, sales, and administration
C. Assets, liabilities, and equity
D. Revenue, expenses, and dividends
Answer: A. Materials, labor, and overhead
, Rationale: Manufacturing costs consist of direct materials, direct labor,
and manufacturing overhead. Together, these costs determine the cost
of producing inventory.
6. Which inventory account represents products that are completed but
not yet sold?
A. Raw materials inventory
B. Work-in-process inventory
C. Finished goods inventory
D. Merchandise inventory
Answer: C. Finished goods inventory
Rationale: Finished goods inventory includes completed products
awaiting sale to customers.
7. Raw materials inventory includes:
A. Completed products ready for customers
B. Materials purchased for production but not yet used
C. Products currently being assembled
D. Goods returned by customers
