Principles of Financial and Managerial Accoun ng -
D196 WGU With complete solu on| RATED A+ 2026
the produc on budget
Sales budget + ending finished goods inventory - beginning finished goods inventory
direct materials produc on budget
Produc on budget × direct materials per unit
the direct materials purchases budget
Direct materials produc on budget + ending direct materials inventory - beginning direct
materials inventory
Cash collected from customers
(current period revenue × current period collec on rate) + cash collected from previous period
sales
Cash payments to suppliers
(current period purchases × current period payment rate) + cash paid on previous period
purchases
Cost Variance
Difference between actual costs and budgeted costs
Contribu on Margin
= Sales Revenue - Variable Costs
The difference between total sales and variable costs; the por on of sales revenue available to
cover fixed costs and provide a profit.
Target Income
= Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
At break-even
Target income = 0
,Sales Revenue
= Sales Price x Number of Units
Variable Costs
= Variable Cost per Unit x Number of Units
Costs that change in total in direct propor on to changes in ac vity level.
Variable Cost Ra o x Sales Revenue
Variable Costs
Unit-level ac vi es
Ac vi es that take place each me a unit of product is produced.
Batch-level ac vi es
Ac vi es that take place in order to support a batch or produc on run, regardless of the size of
the batch.
Product-line Ac vi es
Ac vi es that take place in order to support a product line, regardless of the number of batches
or individual units produced.
cost pool
Total cost being generated by a specific overhead cost ac vity.
cost driver
A numerical measure used to reflect the amount of a specific cost that is associated with a
par cular ac vity
Ac vity rate
The amount of the es mated cost pool divided by the es mated number of cost driver events
How do expenses impact the accoun ng equa on?
Expenses decrease owners' equity
Purpose of the accoun ng cycle?
To turn informa on about transac ons into financial statements
How is gross profit computed?
, Sales minus cost of good sold
Which type of account is retained earnings?
Equity
How does a classified balance sheet provide useful info to a decision maker?
It dis nguishes between current and long-term assets
What are the three primary func ons that company managers use managerial accoun ng info
for?
Planning, controlling, evalua ng
How could a period cost be reported in an income statement?
As an admin expense
How are the wages of the cashiers classified in a merchandising company?
Selling expense
What is the label given to the quan ty computed as es mated level of ac vity
Predetermined overhead rate
In a job order cos ng system, what is the proper accoun ng for a product cost?
It is reported as a part of cost of goods sold
Which item is a period cost?
U lity bills to heat the headquarters building
Accoun ng System
The procedures and processes used by a business to analyze transac ons, handle rou ne
bookkeeping tasks, and structure informa on so it can be used to evaluate the performance and
health of the business.
Ac vity-based Cos ng (ABC)
A method of a=ribu ng overhead costs to products based on measurable factors that relate to
ac vi es that create overhead costs.
Arm's-length Transac on
A transac on in which a buyer and seller act independently to get the best possible deal.
D196 WGU With complete solu on| RATED A+ 2026
the produc on budget
Sales budget + ending finished goods inventory - beginning finished goods inventory
direct materials produc on budget
Produc on budget × direct materials per unit
the direct materials purchases budget
Direct materials produc on budget + ending direct materials inventory - beginning direct
materials inventory
Cash collected from customers
(current period revenue × current period collec on rate) + cash collected from previous period
sales
Cash payments to suppliers
(current period purchases × current period payment rate) + cash paid on previous period
purchases
Cost Variance
Difference between actual costs and budgeted costs
Contribu on Margin
= Sales Revenue - Variable Costs
The difference between total sales and variable costs; the por on of sales revenue available to
cover fixed costs and provide a profit.
Target Income
= Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
At break-even
Target income = 0
,Sales Revenue
= Sales Price x Number of Units
Variable Costs
= Variable Cost per Unit x Number of Units
Costs that change in total in direct propor on to changes in ac vity level.
Variable Cost Ra o x Sales Revenue
Variable Costs
Unit-level ac vi es
Ac vi es that take place each me a unit of product is produced.
Batch-level ac vi es
Ac vi es that take place in order to support a batch or produc on run, regardless of the size of
the batch.
Product-line Ac vi es
Ac vi es that take place in order to support a product line, regardless of the number of batches
or individual units produced.
cost pool
Total cost being generated by a specific overhead cost ac vity.
cost driver
A numerical measure used to reflect the amount of a specific cost that is associated with a
par cular ac vity
Ac vity rate
The amount of the es mated cost pool divided by the es mated number of cost driver events
How do expenses impact the accoun ng equa on?
Expenses decrease owners' equity
Purpose of the accoun ng cycle?
To turn informa on about transac ons into financial statements
How is gross profit computed?
, Sales minus cost of good sold
Which type of account is retained earnings?
Equity
How does a classified balance sheet provide useful info to a decision maker?
It dis nguishes between current and long-term assets
What are the three primary func ons that company managers use managerial accoun ng info
for?
Planning, controlling, evalua ng
How could a period cost be reported in an income statement?
As an admin expense
How are the wages of the cashiers classified in a merchandising company?
Selling expense
What is the label given to the quan ty computed as es mated level of ac vity
Predetermined overhead rate
In a job order cos ng system, what is the proper accoun ng for a product cost?
It is reported as a part of cost of goods sold
Which item is a period cost?
U lity bills to heat the headquarters building
Accoun ng System
The procedures and processes used by a business to analyze transac ons, handle rou ne
bookkeeping tasks, and structure informa on so it can be used to evaluate the performance and
health of the business.
Ac vity-based Cos ng (ABC)
A method of a=ribu ng overhead costs to products based on measurable factors that relate to
ac vi es that create overhead costs.
Arm's-length Transac on
A transac on in which a buyer and seller act independently to get the best possible deal.
