WGU D101 Cost and Managerial Accounting Objective Assessment Actual Exam Questions and Answers Latest Update

WGU D101 Cost and Managerial Accounting Objective
Assessment Prep | Practice Questions & Answers with Rationale

EXAM COVERAGE SUMMARY
Cost Concepts & Classifications
 Manufacturing vs. nonmanufacturing costs
 Product vs. period costs
 Direct materials, direct labor, manufacturing overhead
 Variable, fixed, mixed, and stepped costs
 Conversion costs and prime costs
 Cost behavior patterns
 Relevant range concept
 Sunk costs vs. opportunity costs
 Differential/relevant costs
Job Order Costing
 When to use job order costing
 Cost accumulation and tracking by job
 Journal entries for materials, labor, overhead
 Predetermined overhead rate calculation
 Applying overhead to production
 Overapplied/underapplied overhead
 Cost of Goods Manufactured schedule
 Cost of Goods Sold calculation
Process Costing
 When to use process costing
 Equivalent units of production
 Weighted-average method
 Cost per equivalent unit
 Assigning costs to completed units and ending WIP
 Process center cost flows
Activity-Based Costing (ABC)
 Cost pools and cost drivers
 Unit-level, batch-level, product-line, facility-level activities
 Traditional vs. ABC overhead allocation

,  Activity rates calculation
 Benefits and implementation of ABC
Cost-Volume-Profit Analysis
 Contribution margin and contribution margin ratio
 Break-even point calculation (units and dollars)
 Target income analysis
 CVP graph interpretation
 Operating leverage
 Degree of operating leverage
 Margin of safety
 Sales mix considerations
Budgeting
 Master budget components
 Sales budget
 Production budget
 Direct materials, direct labor, overhead budgets
 Cash collections schedule
 Selling and administrative budget
Variance Analysis
 Materials price and quantity variances
 Labor rate and efficiency variances
 Variable overhead spending and efficiency variances
 Favorable vs. unfavorable variances
 Management by exception
Relevant Costing & Decision-Making
 Special order decisions
 Make-or-buy (outsourcing) decisions
 Differential cost analysis
 Critical resource factor
 Price-maker vs. price-taker
 Economies of scale

,Questions 1-50

1. A manufacturing company has total manufacturing costs of $500,000, beginning work-in-process
inventory of $40,000, and ending work-in-process inventory of $35,000. What is the cost of goods
manufactured?

 A) $465,000

 B) $495,000

 C) $505,000

 D) $535,000

 Answer: C) $505,000

 Rationale: COGM = Total Manufacturing Costs + Beginning WIP - Ending WIP, so
$500,000 + $40,000 - $35,000 = $505,000.

2. A company's actual manufacturing overhead was $220,000 and applied manufacturing overhead
was $195,000. How should the manufacturing overhead account be closed?

 A) Debit Cost of Goods Sold for $25,000

 B) Credit Cost of Goods Sold for $25,000

 C) Debit Manufacturing Overhead for $25,000

 D) Credit Manufacturing Overhead for $220,000

 Answer: A) Debit Cost of Goods Sold for $25,000

 Rationale: Underapplied overhead occurs when actual exceeds applied by $25,000, requiring
a debit to COGS to increase expense.

3. Which type of activity involves supporting a specific production run regardless of the batch size?

 A) Unit-level activity

 B) Batch-level activity

 C) Product-line activity

 D) Facility-level activity

 Answer: B) Batch-level activity

 Rationale: Batch-level activities occur each time a new production batch is started or
completed, regardless of individual unit quantities.

, 4. What is the contribution margin ratio if sales revenue is $800,000 and variable costs are $320,000?

 A) 40%

 B) 60%

 C) 70%

 D) 80%

 Answer: B) 60%

 Rationale: Contribution margin is $480,000 ($800,000 - $320,000), divided by sales revenue
gives 60%.

5. A company budgets sales of 10,000 units, has 500 units in beginning inventory, and wants 800
units in ending inventory. What is the budgeted production in units?

 A) 9,700 units

 B) 10,000 units

 C) 10,300 units

 D) 10,800 units

 Answer: C) 10,300 units

 Rationale: Production = Sales + Ending Inventory - Beginning Inventory, so 10,000 + 800 -
500 = 10,300 units.

6. Which costs remain constant in total regardless of activity level within the relevant range?

 A) Variable costs

 B) Fixed costs

 C) Mixed costs

 D) Stepped costs

 Answer: B) Fixed costs

 Rationale: Fixed costs remain unchanged in total over a specific activity range, though per-
unit amounts vary inversely with volume.

7. A company's contribution margin per unit is $15, fixed costs are $45,000, and target net income is
$30,000. How many units must be sold?