WGU D101 COST & MANAGERIAL ACCOUNTING: KEY CONCEPTS AND FORMULAS UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

WGU D101 COST & MANAGERIAL ACCOUNTING: KEY
CONCEPTS AND FORMULAS UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. What is managerial accounting?
Answer:
Accounting information used internally by managers to make decisions, plan, control operations, and
evaluate performance.

Question:
2. What is financial accounting?
Answer:
Accounting information prepared primarily for external users such as investors, creditors, and regulators.

Question:
3. What is a product cost?
Answer:
A cost assigned to inventory and eventually expensed as cost of goods sold when the product is sold.

Question:
4. What are the three product costs?
Answer:
Direct materials, direct labor, and manufacturing overhead.

Question:
5. What is a period cost?
Answer:
A cost expensed during the period in which it is incurred rather than included in inventory.

Question:
6. Give examples of period costs.
Answer:
Selling expenses and administrative expenses.

Question:
7. What is a direct cost?
Answer:
A cost that can be conveniently and economically traced to a specific cost object.

Question:
8. What is an indirect cost?
Answer:
A cost that cannot be conveniently traced to a specific cost object.

, Question:
9. What is a cost object?
Answer:
Anything for which management wants to measure costs, such as a product, department, customer, or
project.

Question:
10. What is a variable cost?
Answer:
A cost that changes in total as activity changes but remains constant per unit.

Question:
11. What is a fixed cost?
Answer:
A cost that remains constant in total within the relevant range, regardless of changes in activity.

Question:
12. What happens to fixed cost per unit when production increases?
Answer:
Fixed cost per unit decreases.

Question:
13. What happens to variable cost per unit when production increases?
Answer:
It generally remains constant.

Question:
14. What is a mixed cost?
Answer:
A cost containing both fixed and variable components.

Question:
15. What is the relevant range?
Answer:
The range of activity within which assumptions about fixed and variable costs are valid.

Question:
16. What is the basic total cost equation?
Answer:
Total Cost = Fixed Cost + (Variable Cost per Unit × Activity).

Question:
17. What is CVP analysis?
Answer:
Cost-volume-profit analysis examines how changes in sales volume, selling price, variable costs, and fixed
costs affect profit.