WESTERN GOVERNORS UNIVERSITY
WGU C213 ACCOUNTING FOR DECISION MAKERS
WGU
Accounting for Decision Makers
Final Comprehensive Examination
Academic Year 2026/2027
200 Verified Questions and Correct Answer Rationales
Managerial Accounting - Cost Behavior - CVP - Budgeting - Decision Making
Question, Answer and Rationale Format
Page Borders & Page Numbers Included
Content Review Included
2026/2027 Edition | 200 Questions | C213
Page 1
, Content Review - High-Yield Summary for WGU C213
1. Managerial vs Financial & Cost Classification
Managerial accounting internal decision making future oriented no GAAP budgeting cost analysis. Financial
accounting external investors creditors historical GAAP. Manufacturing costs: DM raw materials traceable,
DL workers directly making product, MOH indirect factory costs rent utilities indirect labor depreciation.
Product costs inventoriable DM DL MOH becomes COGS when sold, period costs SG&A; expensed
immediately. COGM = Beginning WIP + Total manufacturing costs (DM used + DL + MOH) - Ending WIP.
DM used = Beginning RM + Purchases - Ending RM. COGS = Beginning FG + COGM - Ending FG.
Cost behavior: variable costs total changes proportionally with activity per unit constant within relevant range
e.g., DM DL variable MOH commissions. Fixed costs total constant within relevant range per unit decreases
e.g., rent depreciation salaries. Mixed costs both components e.g., utilities must be separated high-low
method variable = (High cost - Low cost)/(High activity - Low activity) fixed = total - variable*activity or
regression least squares more accurate. Relevant range range where cost behavior assumptions valid
outside fixed may change step costs.
2. CVP Analysis - Contribution Margin, Break-Even, Target Profit
Contribution margin = Sales - Variable costs amount available to cover fixed and profit. CM ratio = CM /
Sales. Contribution margin income statement Sales - Variable = CM - Fixed = Operating income used
internal vs traditional Sales - COGS = Gross profit - SG&A; = Operating income GAAP. Break-even units =
Fixed costs / CM per unit. Break-even dollars = Fixed / CM ratio or break-even units * price. Break-even
where total revenue = total costs profit zero.
Target profit units = (Fixed + Target profit)/CM per unit. Target profit dollars = (Fixed + Target)/CM ratio.
Margin of safety = Actual or budgeted sales - Break-even sales measure of risk MOS ratio = MOS/Actual.
Operating leverage DOL = Contribution margin / Operating income measures sensitivity % change operating
income = DOL * % change sales high fixed costs high leverage high risk reward.
3. Costing Systems - Job Order, Process, ABC, Overhead
Job order costing custom unique jobs e.g., construction consulting tracks costs per job. Process costing
homogeneous mass production e.g., chemicals oil averaged per unit per department. Predetermined
overhead rate = Estimated total MOH / Estimated allocation base e.g., DL hours machine hours. Applied
MOH = Pred rate * Actual base. Over/under applied = Actual MOH - Applied MOH overapplied Applied >
Actual underapplied Applied < Actual adjusted to COGS at period end overapplied decreases COGS
underapplied increases.
Activity-Based Costing ABC allocates overhead based on activities cost drivers more accurate than
traditional single base when product diversity overhead high. Steps: identify activities, assign costs to
activity cost pools, calculate activity rates, allocate to products. Value-added activities customer willing to
pay for e.g., assembly non-value-added waste that can be eliminated e.g., waiting rework inspection storage
lean accounting.
4. Decision Making - Relevant Costs, Make/Buy, Special Order, Keep/Drop
Page 2
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
, Relevant costs future costs that differ between alternatives, irrelevant costs sunk already incurred cannot be
recovered or future same between alternatives avoidable costs relevant opportunity cost benefit foregone
from next best alternative relevant. Sunk cost fallacy should ignore sunk costs.
Make or buy: manufacture internally or purchase externally based on relevant costs variable + avoidable
fixed + opportunity cost capacity quality reliability if buy cost less than relevant make cost buy. Special order:
accept/reject one-time order special price below normal with excess capacity relevant costs variable +
avoidable fixed + opportunity cost accept if special price > relevant costs no impact regular sales. Keep or
drop segment: based on avoidable costs and CM lost not just net income which includes allocated
unavoidable fixed if avoidable costs > CM lost drop may increase operating income consider qualitative. Sell
or process further: joint products at split-off sell or process further if incremental revenue > incremental costs
beyond split-off joint costs sunk irrelevant. Joint costs costs before split-off where multiple products emerge
split-off point where separable.
5. Budgeting, Variance, Responsibility Accounting, Absorption vs Variable
Budgeting purpose planning control performance evaluation communication coordination motivating
authorizing. Master budget comprehensive includes operating budgets sales production DM DL MOH
SG&A; budgeted income statement and financial budgets cash budget capital budget budgeted balance
sheet cash flow starts with sales budget. Production budget = Budgeted sales + Desired ending FG -
Beginning FG = Required production. DM purchases = DM needed for production + Desired ending RM -
Beginning RM. Cash budget forecasts cash receipts disbursements ensure adequate cash plan borrowing
investing. Flexible budget adjusted for actual activity level used for performance evaluation better than static
budget based on planned activity.
Variance analysis actual vs budgeted favorable if actual better than budget unfavorable worse for costs
favorable actual < budget unfavorable actual > budget for revenues favorable actual > budget. Standard
costing predetermined expected costs DM DL MOH used budgeting control variance. Absorption costing
GAAP includes DM DL variable MOH and fixed MOH in product cost inventoriable variable costing internal
includes only DM DL variable MOH as product cost fixed MOH period cost expensed difference when
inventory changes if production > sales absorption income > variable income due to fixed MOH deferred in
ending inventory if production < sales absorption < variable if production = sales equal. Responsibility
accounting managers responsible for only controllable items cost center costs profit center revenues costs
investment center revenues costs investments. Decentralization benefits faster decisions local knowledge
motivation evaluation frees top management training costs goal incongruence duplication. ROI = Operating
income / Average operating assets Residual income = Operating income - (Minimum required return *
Operating assets) ROI may cause underinvestment residual avoids.
Page 3
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
, Examination - 200 Questions | Question, Answer &
Rationale Format
GREEN = Correct Answer | BLUE = Rationale | Borders + Page Numbers
Question 1: What is the primary purpose of managerial accounting vs financial accounting?
A. Managerial provides internal decision making info future oriented, financial provides external reporting
historical GAAP
B. Same purpose
C. Managerial external only
D. Financial internal only
Answer: A. Managerial provides internal decision making info future oriented, financial
provides external reporting historical GAAP
Rationale: Managerial accounting internal users decision making future oriented no GAAP required includes
budgeting cost analysis. Financial accounting external users investors creditors historical GAAP required.
Question 2: What are the three major manufacturing costs?
A. Direct materials, direct labor, manufacturing overhead
B. Only direct materials
C. Only direct labor
D. Only overhead
Answer: A. Direct materials, direct labor, manufacturing overhead
Rationale: Three manufacturing costs: direct materials raw materials traceable, direct labor workers directly
making product, manufacturing overhead indirect costs factory rent utilities indirect labor depreciation.
Question 3: What is the difference between product costs and period costs?
A. Product costs inventoriable DM DL MOH becomes COGS when sold, period costs expensed immediately
SG&A;
B. Same
C. Product costs expensed immediately
D. Period costs inventoriable
Answer: A. Product costs inventoriable DM DL MOH becomes COGS when sold, period costs
expensed immediately SG&A;
Rationale: Product costs inventoriable DM DL MOH included in inventory balance sheet becomes COGS when
sold. Period costs SG&A; selling general administrative expensed immediately income statement not
inventoriable.
Question 4: What is Cost of Goods Manufactured COGM formula?
A. Beginning WIP + Total manufacturing costs - Ending WIP
B. Beginning FG + COGM - Ending FG
C. Only total manufacturing costs
D. No formula
Page 4
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
WGU C213 ACCOUNTING FOR DECISION MAKERS
WGU
Accounting for Decision Makers
Final Comprehensive Examination
Academic Year 2026/2027
200 Verified Questions and Correct Answer Rationales
Managerial Accounting - Cost Behavior - CVP - Budgeting - Decision Making
Question, Answer and Rationale Format
Page Borders & Page Numbers Included
Content Review Included
2026/2027 Edition | 200 Questions | C213
Page 1
, Content Review - High-Yield Summary for WGU C213
1. Managerial vs Financial & Cost Classification
Managerial accounting internal decision making future oriented no GAAP budgeting cost analysis. Financial
accounting external investors creditors historical GAAP. Manufacturing costs: DM raw materials traceable,
DL workers directly making product, MOH indirect factory costs rent utilities indirect labor depreciation.
Product costs inventoriable DM DL MOH becomes COGS when sold, period costs SG&A; expensed
immediately. COGM = Beginning WIP + Total manufacturing costs (DM used + DL + MOH) - Ending WIP.
DM used = Beginning RM + Purchases - Ending RM. COGS = Beginning FG + COGM - Ending FG.
Cost behavior: variable costs total changes proportionally with activity per unit constant within relevant range
e.g., DM DL variable MOH commissions. Fixed costs total constant within relevant range per unit decreases
e.g., rent depreciation salaries. Mixed costs both components e.g., utilities must be separated high-low
method variable = (High cost - Low cost)/(High activity - Low activity) fixed = total - variable*activity or
regression least squares more accurate. Relevant range range where cost behavior assumptions valid
outside fixed may change step costs.
2. CVP Analysis - Contribution Margin, Break-Even, Target Profit
Contribution margin = Sales - Variable costs amount available to cover fixed and profit. CM ratio = CM /
Sales. Contribution margin income statement Sales - Variable = CM - Fixed = Operating income used
internal vs traditional Sales - COGS = Gross profit - SG&A; = Operating income GAAP. Break-even units =
Fixed costs / CM per unit. Break-even dollars = Fixed / CM ratio or break-even units * price. Break-even
where total revenue = total costs profit zero.
Target profit units = (Fixed + Target profit)/CM per unit. Target profit dollars = (Fixed + Target)/CM ratio.
Margin of safety = Actual or budgeted sales - Break-even sales measure of risk MOS ratio = MOS/Actual.
Operating leverage DOL = Contribution margin / Operating income measures sensitivity % change operating
income = DOL * % change sales high fixed costs high leverage high risk reward.
3. Costing Systems - Job Order, Process, ABC, Overhead
Job order costing custom unique jobs e.g., construction consulting tracks costs per job. Process costing
homogeneous mass production e.g., chemicals oil averaged per unit per department. Predetermined
overhead rate = Estimated total MOH / Estimated allocation base e.g., DL hours machine hours. Applied
MOH = Pred rate * Actual base. Over/under applied = Actual MOH - Applied MOH overapplied Applied >
Actual underapplied Applied < Actual adjusted to COGS at period end overapplied decreases COGS
underapplied increases.
Activity-Based Costing ABC allocates overhead based on activities cost drivers more accurate than
traditional single base when product diversity overhead high. Steps: identify activities, assign costs to
activity cost pools, calculate activity rates, allocate to products. Value-added activities customer willing to
pay for e.g., assembly non-value-added waste that can be eliminated e.g., waiting rework inspection storage
lean accounting.
4. Decision Making - Relevant Costs, Make/Buy, Special Order, Keep/Drop
Page 2
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
, Relevant costs future costs that differ between alternatives, irrelevant costs sunk already incurred cannot be
recovered or future same between alternatives avoidable costs relevant opportunity cost benefit foregone
from next best alternative relevant. Sunk cost fallacy should ignore sunk costs.
Make or buy: manufacture internally or purchase externally based on relevant costs variable + avoidable
fixed + opportunity cost capacity quality reliability if buy cost less than relevant make cost buy. Special order:
accept/reject one-time order special price below normal with excess capacity relevant costs variable +
avoidable fixed + opportunity cost accept if special price > relevant costs no impact regular sales. Keep or
drop segment: based on avoidable costs and CM lost not just net income which includes allocated
unavoidable fixed if avoidable costs > CM lost drop may increase operating income consider qualitative. Sell
or process further: joint products at split-off sell or process further if incremental revenue > incremental costs
beyond split-off joint costs sunk irrelevant. Joint costs costs before split-off where multiple products emerge
split-off point where separable.
5. Budgeting, Variance, Responsibility Accounting, Absorption vs Variable
Budgeting purpose planning control performance evaluation communication coordination motivating
authorizing. Master budget comprehensive includes operating budgets sales production DM DL MOH
SG&A; budgeted income statement and financial budgets cash budget capital budget budgeted balance
sheet cash flow starts with sales budget. Production budget = Budgeted sales + Desired ending FG -
Beginning FG = Required production. DM purchases = DM needed for production + Desired ending RM -
Beginning RM. Cash budget forecasts cash receipts disbursements ensure adequate cash plan borrowing
investing. Flexible budget adjusted for actual activity level used for performance evaluation better than static
budget based on planned activity.
Variance analysis actual vs budgeted favorable if actual better than budget unfavorable worse for costs
favorable actual < budget unfavorable actual > budget for revenues favorable actual > budget. Standard
costing predetermined expected costs DM DL MOH used budgeting control variance. Absorption costing
GAAP includes DM DL variable MOH and fixed MOH in product cost inventoriable variable costing internal
includes only DM DL variable MOH as product cost fixed MOH period cost expensed difference when
inventory changes if production > sales absorption income > variable income due to fixed MOH deferred in
ending inventory if production < sales absorption < variable if production = sales equal. Responsibility
accounting managers responsible for only controllable items cost center costs profit center revenues costs
investment center revenues costs investments. Decentralization benefits faster decisions local knowledge
motivation evaluation frees top management training costs goal incongruence duplication. ROI = Operating
income / Average operating assets Residual income = Operating income - (Minimum required return *
Operating assets) ROI may cause underinvestment residual avoids.
Page 3
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
, Examination - 200 Questions | Question, Answer &
Rationale Format
GREEN = Correct Answer | BLUE = Rationale | Borders + Page Numbers
Question 1: What is the primary purpose of managerial accounting vs financial accounting?
A. Managerial provides internal decision making info future oriented, financial provides external reporting
historical GAAP
B. Same purpose
C. Managerial external only
D. Financial internal only
Answer: A. Managerial provides internal decision making info future oriented, financial
provides external reporting historical GAAP
Rationale: Managerial accounting internal users decision making future oriented no GAAP required includes
budgeting cost analysis. Financial accounting external users investors creditors historical GAAP required.
Question 2: What are the three major manufacturing costs?
A. Direct materials, direct labor, manufacturing overhead
B. Only direct materials
C. Only direct labor
D. Only overhead
Answer: A. Direct materials, direct labor, manufacturing overhead
Rationale: Three manufacturing costs: direct materials raw materials traceable, direct labor workers directly
making product, manufacturing overhead indirect costs factory rent utilities indirect labor depreciation.
Question 3: What is the difference between product costs and period costs?
A. Product costs inventoriable DM DL MOH becomes COGS when sold, period costs expensed immediately
SG&A;
B. Same
C. Product costs expensed immediately
D. Period costs inventoriable
Answer: A. Product costs inventoriable DM DL MOH becomes COGS when sold, period costs
expensed immediately SG&A;
Rationale: Product costs inventoriable DM DL MOH included in inventory balance sheet becomes COGS when
sold. Period costs SG&A; selling general administrative expensed immediately income statement not
inventoriable.
Question 4: What is Cost of Goods Manufactured COGM formula?
A. Beginning WIP + Total manufacturing costs - Ending WIP
B. Beginning FG + COGM - Ending FG
C. Only total manufacturing costs
D. No formula
Page 4
WGU C213 Accounting for Decision Makers | 2026/2027 | 200Q Final Examination
