WGU D196 OBJECTIVE ASSESSMENT
(OA) EXAM WITH 100% CORRECT AND
VERIFIED ANSWERS
WESTERN GOVERNORS UNIVERSITY
WGU D196
,Which statement is correct with respect to activity-based costing (ABC) overhead allocation?
Overhead is allocated based on several different measures of activity.
For some production processes, job order costing is the correct production costing system to use. With
other production processes, process costing is more appropriate. For which product is process more
appropriate?
Manufacturing identical residential refrigerators
In an ABC system, what is a cost pool?
The collection of overhead costs associated with a specific overhead cost activity
Sara is frustrated with her company's costing system. She suspects that too much overhead cost is being
allocated to generic, simple products, and too little overhead cost is being allocated to custom-designed,
complex products. The existing overhead allocation system is very traditional, with overhead being
allocated strictly based on the number of direct labor hours.
Activity-based costing
How is an activity rate computed in an ABC system?
Cost pool divided by number of cost driver events
For some production processes, job order costing is the correct production costing system to use. With
other production processes, process costing is more appropriate. For which process is process costing
more appropriate?
Producing identical cans of paint
What is included in the direct materials cost?
The cost of raw materials that are used directly in the manufacture of products
What is manufacturing overhead?
All manufacturing costs that are not classified as either direct materials or direct labor
In an ABC system, how are the costs belonging to a cost pool identified?
By carefully analyzing what activities cause the need for each specific overhead cost
How is overhead allocated in an ABC system?
Overhead per cost driver multiplied by the number of cost driver events
Companies that use process costing do not specifically identify the costs associated with each job or
order being produced. Instead, these companies compute costs on a different basis. What is this basis?
Amount of cost associated with work done for a particular period of time
Which phrase below describes job order costing?
, A system in which manufacturing costs are accumulated by separate product orders or batches (a
method where production expenses are added up by various product orders or batches)
When is job order costing NOT appropriate?
When a company produces products or services in a continuous process in which jobs or products or
projects can't be specifically identified (When a business engages in continuous production of goods or
services while making it impossible to identify individual goods, or projects)
In a job order costing system, how are factory supervisor wages classified?
Manufacturing overhead
What is a period cost?
A cost associated with activities occurring outside the factory
One important result of using an ABC system is more accurate product costing. What is another
important result of using an ABC system?
Better decisions made
An ABC overhead allocation system is not always substantially better than a traditional system. When
does a traditional overhead allocation system work well?
When the production process for each different product or project or process is basically the same
What is process costing?
A method of product costing in which costs are accumulated by process and averaged over all products
made during a period
What are the three categories of manufacturing costs?
Direct materials, direct labor, and manufacturing overhead
Eva has been asked to redesign Gold Leaf's old job order costing system. One of the first things Eva
notices is that some items are not being recorded correctly. For example, the accounting flow of costs
and the actual flow of costs in the production facility do not appear to match up. The raw materials
inventory, for example, is incorrectly placed after the finished goods inventory. This is the first thing Eva
wants to fix.
In what order should Eva place the flow of materials costs through the rest of the production process?
Raw materials inventory, work-in-process inventory, finished goods inventory, cost of goods sold
After reviewing the job order costing plan, Eva wonders if she should go another direction for Gold Leaf
Trophies. She is now trying to determine the cost of producing each order the company receives for
custom-manufactured trophies. Eva can easily trace the direct materials and the direct labor costs
(OA) EXAM WITH 100% CORRECT AND
VERIFIED ANSWERS
WESTERN GOVERNORS UNIVERSITY
WGU D196
,Which statement is correct with respect to activity-based costing (ABC) overhead allocation?
Overhead is allocated based on several different measures of activity.
For some production processes, job order costing is the correct production costing system to use. With
other production processes, process costing is more appropriate. For which product is process more
appropriate?
Manufacturing identical residential refrigerators
In an ABC system, what is a cost pool?
The collection of overhead costs associated with a specific overhead cost activity
Sara is frustrated with her company's costing system. She suspects that too much overhead cost is being
allocated to generic, simple products, and too little overhead cost is being allocated to custom-designed,
complex products. The existing overhead allocation system is very traditional, with overhead being
allocated strictly based on the number of direct labor hours.
Activity-based costing
How is an activity rate computed in an ABC system?
Cost pool divided by number of cost driver events
For some production processes, job order costing is the correct production costing system to use. With
other production processes, process costing is more appropriate. For which process is process costing
more appropriate?
Producing identical cans of paint
What is included in the direct materials cost?
The cost of raw materials that are used directly in the manufacture of products
What is manufacturing overhead?
All manufacturing costs that are not classified as either direct materials or direct labor
In an ABC system, how are the costs belonging to a cost pool identified?
By carefully analyzing what activities cause the need for each specific overhead cost
How is overhead allocated in an ABC system?
Overhead per cost driver multiplied by the number of cost driver events
Companies that use process costing do not specifically identify the costs associated with each job or
order being produced. Instead, these companies compute costs on a different basis. What is this basis?
Amount of cost associated with work done for a particular period of time
Which phrase below describes job order costing?
, A system in which manufacturing costs are accumulated by separate product orders or batches (a
method where production expenses are added up by various product orders or batches)
When is job order costing NOT appropriate?
When a company produces products or services in a continuous process in which jobs or products or
projects can't be specifically identified (When a business engages in continuous production of goods or
services while making it impossible to identify individual goods, or projects)
In a job order costing system, how are factory supervisor wages classified?
Manufacturing overhead
What is a period cost?
A cost associated with activities occurring outside the factory
One important result of using an ABC system is more accurate product costing. What is another
important result of using an ABC system?
Better decisions made
An ABC overhead allocation system is not always substantially better than a traditional system. When
does a traditional overhead allocation system work well?
When the production process for each different product or project or process is basically the same
What is process costing?
A method of product costing in which costs are accumulated by process and averaged over all products
made during a period
What are the three categories of manufacturing costs?
Direct materials, direct labor, and manufacturing overhead
Eva has been asked to redesign Gold Leaf's old job order costing system. One of the first things Eva
notices is that some items are not being recorded correctly. For example, the accounting flow of costs
and the actual flow of costs in the production facility do not appear to match up. The raw materials
inventory, for example, is incorrectly placed after the finished goods inventory. This is the first thing Eva
wants to fix.
In what order should Eva place the flow of materials costs through the rest of the production process?
Raw materials inventory, work-in-process inventory, finished goods inventory, cost of goods sold
After reviewing the job order costing plan, Eva wonders if she should go another direction for Gold Leaf
Trophies. She is now trying to determine the cost of producing each order the company receives for
custom-manufactured trophies. Eva can easily trace the direct materials and the direct labor costs
