WGU D101
WGU D101 Cost and Managerial Accounting |OA| Objective
Assessment | 109 Actual Questions and Answers (Verified Answers),
100% Guaranteed Pass || Complete A+ Guide
Testbankscove
➢
➢
➢
➢
➢
,Question 1
In addition to better cost allocation, what benefit comes from creating and using
an ABC overhead allocation system?
a. Reduction in both sales and income taxes
b. Better understanding of the underlying business processes
c. Increase in selling prices through demand management maximization
d. Reduction in direct labor costs
Correct Answer: b. Better understanding of the underlying business processes
Rationale: In the right setting, when a company's operations involve a variety of
different products and processes, ABC analysis not only results in a better
allocation of overhead costs, but it also results in a better understanding of the
underlying business processes when those business processes are analyzed.
Question 2
What is important to consider when determining how to allocate overhead costs to
a product or a production process?
a. Determining what factors are causing direct labor costs to be incurred
b. Determining what factors are causing all manufacturing costs to be incurred
c. Determining what factors are causing direct materials costs to be incurred
d. Determining what factors are causing overhead costs to be incurred
,Correct Answer: d. Determining what factors are causing overhead costs to be
incurred
Rationale: It is important when determining how to allocate overhead costs to a
product or production process to consider what factors are causing overhead
costs to be incurred in the manufacturing process in the first place.
Question 3
The most common way to eliminate overapplied and underapplied manufacturing
overhead is to record the amount to cost of goods sold. What is an alternative way
to eliminate these overapplications or underapplications of manufacturing
overhead?
a. Allocate overapplied or underapplied manufacturing overhead to finished
goods inventory only
b. Allocate overapplied or underapplied manufacturing overhead to work-in-
process inventory, finished goods inventory, and cost of goods sold on the
basis of ending balances in these accounts
c. Allocate overapplied or underapplied manufacturing overhead to work-in-
process inventory only
d. Allocate overapplied or underapplied manufacturing overhead to
manufacturing overhead payable
Correct Answer: b. Allocate overapplied or underapplied manufacturing
overhead to work-in-process inventory, finished goods inventory, and cost of
goods sold on the basis of ending balances in these accounts
Rationale: While the most common method is to close the balance to cost of
goods sold, an alternative is to prorate the overapplied or underapplied amount
among Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods
Sold based on their ending balances.
, Question 4
Which statement describes activity-based costing (ABC)?
a. ABC includes only manufacturing costs in calculating product costs.
b. ABC includes only costs related to selling and distributing the product.
c. ABC considers nonmanufacturing and manufacturing costs.
d. ABC considers only manufacturing costs in evaluating product costs.
Correct Answer: c. ABC considers nonmanufacturing and manufacturing costs.
Rationale: ABC considers both nonmanufacturing and manufacturing costs, which
can be associated, both directly and indirectly, in the manufacturing of a product.
Question 5
The costs of ending work-in-process inventory is calculated by which of the
following formulas?
a. Cost per unit for conversion costs times the number of equivalent units for
conversion costs
b. Cost per unit of direct materials times equivalent units for materials plus
conversion costs per unit times the number of equivalent units for conversion
costs
c. Cost per unit for direct materials times equivalent units for materials minus
conversion costs per unit times the number of equivalent units for conversion
costs
d. Cost for direct materials per unit times the number of equivalent units for
direct materials
Correct Answer: b. Cost per unit of direct materials times equivalent units for
materials plus conversion costs per unit times the number of equivalent units for
conversion costs
WGU D101 Cost and Managerial Accounting |OA| Objective
Assessment | 109 Actual Questions and Answers (Verified Answers),
100% Guaranteed Pass || Complete A+ Guide
Testbankscove
➢
➢
➢
➢
➢
,Question 1
In addition to better cost allocation, what benefit comes from creating and using
an ABC overhead allocation system?
a. Reduction in both sales and income taxes
b. Better understanding of the underlying business processes
c. Increase in selling prices through demand management maximization
d. Reduction in direct labor costs
Correct Answer: b. Better understanding of the underlying business processes
Rationale: In the right setting, when a company's operations involve a variety of
different products and processes, ABC analysis not only results in a better
allocation of overhead costs, but it also results in a better understanding of the
underlying business processes when those business processes are analyzed.
Question 2
What is important to consider when determining how to allocate overhead costs to
a product or a production process?
a. Determining what factors are causing direct labor costs to be incurred
b. Determining what factors are causing all manufacturing costs to be incurred
c. Determining what factors are causing direct materials costs to be incurred
d. Determining what factors are causing overhead costs to be incurred
,Correct Answer: d. Determining what factors are causing overhead costs to be
incurred
Rationale: It is important when determining how to allocate overhead costs to a
product or production process to consider what factors are causing overhead
costs to be incurred in the manufacturing process in the first place.
Question 3
The most common way to eliminate overapplied and underapplied manufacturing
overhead is to record the amount to cost of goods sold. What is an alternative way
to eliminate these overapplications or underapplications of manufacturing
overhead?
a. Allocate overapplied or underapplied manufacturing overhead to finished
goods inventory only
b. Allocate overapplied or underapplied manufacturing overhead to work-in-
process inventory, finished goods inventory, and cost of goods sold on the
basis of ending balances in these accounts
c. Allocate overapplied or underapplied manufacturing overhead to work-in-
process inventory only
d. Allocate overapplied or underapplied manufacturing overhead to
manufacturing overhead payable
Correct Answer: b. Allocate overapplied or underapplied manufacturing
overhead to work-in-process inventory, finished goods inventory, and cost of
goods sold on the basis of ending balances in these accounts
Rationale: While the most common method is to close the balance to cost of
goods sold, an alternative is to prorate the overapplied or underapplied amount
among Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods
Sold based on their ending balances.
, Question 4
Which statement describes activity-based costing (ABC)?
a. ABC includes only manufacturing costs in calculating product costs.
b. ABC includes only costs related to selling and distributing the product.
c. ABC considers nonmanufacturing and manufacturing costs.
d. ABC considers only manufacturing costs in evaluating product costs.
Correct Answer: c. ABC considers nonmanufacturing and manufacturing costs.
Rationale: ABC considers both nonmanufacturing and manufacturing costs, which
can be associated, both directly and indirectly, in the manufacturing of a product.
Question 5
The costs of ending work-in-process inventory is calculated by which of the
following formulas?
a. Cost per unit for conversion costs times the number of equivalent units for
conversion costs
b. Cost per unit of direct materials times equivalent units for materials plus
conversion costs per unit times the number of equivalent units for conversion
costs
c. Cost per unit for direct materials times equivalent units for materials minus
conversion costs per unit times the number of equivalent units for conversion
costs
d. Cost for direct materials per unit times the number of equivalent units for
direct materials
Correct Answer: b. Cost per unit of direct materials times equivalent units for
materials plus conversion costs per unit times the number of equivalent units for
conversion costs
