WGU D559 Advanced Managerial Accounting: Exam 3
50 questions
1. Which statement about managerial accounting is true?
A. It must follow GAAP
B. It is not required to follow GAAP
C. It reports only historical results
D. It is audited by external auditors
Correct Answer: B. It is not required to follow GAAP
Rationale: Managers can design reports to fit their decision needs.
2. A manufacturer reports direct materials of $60,000, direct labor of $60,000 and manufacturing
overhead of $70,000. What is prime cost?
A. $130,000
B. $190,000
C. $120,000
D. $132,000
Correct Answer: C. $120,000
Rationale: Prime cost = direct materials + direct labor.
3. Beginning finished goods $46,000, cost of goods manufactured $455,000, ending finished
goods $40,000. What is cost of goods sold?
A. $455,000
B. $541,000
C. $449,000
D. $461,000
Correct Answer: D. $461,000
Rationale: COGS = $46,000 + $455,000 - $40,000 = $461,000.
4. Beginning work in process $22,000; direct materials used $60,000; direct labor $40,000;
manufacturing overhead applied $115,000; ending work in process $24,000. What is cost of
goods manufactured?
A. $215,000
B. $213,000
C. $261,000
D. $191,000
Correct Answer: B. $213,000
Rationale: COGM = $22,000 + $60,000 + $40,000 + $115,000 - $24,000 = $213,000.
5. Which is an example of a committed fixed cost?
A. Depreciation on equipment
B. Employee training programs
C. Research and development
D. Advertising campaigns
Correct Answer: A. Depreciation on equipment
Rationale: Committed costs arise from long-term investments.
, 6. The contribution margin ratio plus the variable expense ratio equals:
A. 1 (100%)
B. 0
C. The break-even point
D. The margin of safety
Correct Answer: A. 1 (100%)
Rationale: Together they account for every sales dollar.
7. A product sells for $120 and has variable costs of $84 per unit. What is the contribution
margin ratio?
A. 70.0%
B. 42.9%
C. 30.0%
D. 57.1%
Correct Answer: C. 30.0%
Rationale: CM ratio = ($120 - $84) / $120 = 30.0%.
8. Using the high-low method: at 5,000 machine-hours, maintenance cost was $48,000; at 15,000
machine-hours it was $88,000. What is the variable cost per machine-hour?
A. $5.87
B. $9.60
C. $8.00
D. $4.00
Correct Answer: D. $4.00
Rationale: ($88,000 - $48,000) / (15,000 - 5,000) = $4.00 per hour.
9. If a small amount of underapplied overhead is closed to cost of goods sold, COGS will:
A. Decrease
B. Increase
C. Stay the same
D. Be eliminated
Correct Answer: B. Increase
Rationale: Additional cost is added to COGS.
10. When indirect materials are requisitioned for production, the debit is to:
A. Work in Process
B. Finished Goods
C. Manufacturing Overhead
D. Cost of Goods Sold
Correct Answer: C. Manufacturing Overhead
Rationale: Indirect materials are part of overhead.
11. The predetermined overhead rate is $20 per direct labor-hour. Actual direct labor-hours were
42,500 and actual overhead was $842,000. What is the over- or underapplied overhead?
A. $8,000 underapplied
B. $2,000 underapplied
C. $16,000 overapplied
D. $8,000 overapplied
Correct Answer: D. $8,000 overapplied
Rationale: Applied = $20 x 42,500 = $850,000; actual $842,000 - applied = -$8,000, so overhead is
overapplied.
50 questions
1. Which statement about managerial accounting is true?
A. It must follow GAAP
B. It is not required to follow GAAP
C. It reports only historical results
D. It is audited by external auditors
Correct Answer: B. It is not required to follow GAAP
Rationale: Managers can design reports to fit their decision needs.
2. A manufacturer reports direct materials of $60,000, direct labor of $60,000 and manufacturing
overhead of $70,000. What is prime cost?
A. $130,000
B. $190,000
C. $120,000
D. $132,000
Correct Answer: C. $120,000
Rationale: Prime cost = direct materials + direct labor.
3. Beginning finished goods $46,000, cost of goods manufactured $455,000, ending finished
goods $40,000. What is cost of goods sold?
A. $455,000
B. $541,000
C. $449,000
D. $461,000
Correct Answer: D. $461,000
Rationale: COGS = $46,000 + $455,000 - $40,000 = $461,000.
4. Beginning work in process $22,000; direct materials used $60,000; direct labor $40,000;
manufacturing overhead applied $115,000; ending work in process $24,000. What is cost of
goods manufactured?
A. $215,000
B. $213,000
C. $261,000
D. $191,000
Correct Answer: B. $213,000
Rationale: COGM = $22,000 + $60,000 + $40,000 + $115,000 - $24,000 = $213,000.
5. Which is an example of a committed fixed cost?
A. Depreciation on equipment
B. Employee training programs
C. Research and development
D. Advertising campaigns
Correct Answer: A. Depreciation on equipment
Rationale: Committed costs arise from long-term investments.
, 6. The contribution margin ratio plus the variable expense ratio equals:
A. 1 (100%)
B. 0
C. The break-even point
D. The margin of safety
Correct Answer: A. 1 (100%)
Rationale: Together they account for every sales dollar.
7. A product sells for $120 and has variable costs of $84 per unit. What is the contribution
margin ratio?
A. 70.0%
B. 42.9%
C. 30.0%
D. 57.1%
Correct Answer: C. 30.0%
Rationale: CM ratio = ($120 - $84) / $120 = 30.0%.
8. Using the high-low method: at 5,000 machine-hours, maintenance cost was $48,000; at 15,000
machine-hours it was $88,000. What is the variable cost per machine-hour?
A. $5.87
B. $9.60
C. $8.00
D. $4.00
Correct Answer: D. $4.00
Rationale: ($88,000 - $48,000) / (15,000 - 5,000) = $4.00 per hour.
9. If a small amount of underapplied overhead is closed to cost of goods sold, COGS will:
A. Decrease
B. Increase
C. Stay the same
D. Be eliminated
Correct Answer: B. Increase
Rationale: Additional cost is added to COGS.
10. When indirect materials are requisitioned for production, the debit is to:
A. Work in Process
B. Finished Goods
C. Manufacturing Overhead
D. Cost of Goods Sold
Correct Answer: C. Manufacturing Overhead
Rationale: Indirect materials are part of overhead.
11. The predetermined overhead rate is $20 per direct labor-hour. Actual direct labor-hours were
42,500 and actual overhead was $842,000. What is the over- or underapplied overhead?
A. $8,000 underapplied
B. $2,000 underapplied
C. $16,000 overapplied
D. $8,000 overapplied
Correct Answer: D. $8,000 overapplied
Rationale: Applied = $20 x 42,500 = $850,000; actual $842,000 - applied = -$8,000, so overhead is
overapplied.
