D101, WGU D101 Cost and Managerial
Accounting Exam QUESTIONS AND
CORRECT ANSWERS
Miscellaneous materials like glue and nails would be classified as... - CORRECT ANSWER
Manufacturing overhead.
When the product or service provided can be considered as separate and distinct from other products
or services provided, and the manufacturing processes used are different for different products.
Doesn't track period costs. - CORRECT ANSWER Job order costing.
When a company must must track the costs of the product being produced or the service being
provided to be able to compare the cost of the product or service with the price the market is offering.
- CORRECT ANSWER Price-taker.
In cases where the product is customized and unique and the maker of the product is able to charge a
price based on costs and a markup. - CORRECT ANSWER Price-maker.
Examples of such companies include manufacturers of paint, soft drinks, and newspapers, and most
food processing plants. Other examples include large-scale tax preparation or loan processing firms,
such as H&R Block, preparing typical income tax returns for individuals. - CORRECT ANSWER
Process costing.
Direct materials, direct labor, and manufacturing overhead. - CORRECT ANSWER
Components tracked in job order costing.
The cost of raw materials that are used directly in the manufacture of products and are kept in the raw
materials warehouse until used. - CORRECT ANSWER Direct materials.
The wages and other payroll-related expenses of factory employees who work directly on products. -
CORRECT ANSWER Direct labor.
Includes all manufacturing costs that are not classified as direct materials or direct labor. This includes
miscellaneous materials used in production, such as glue or nails; wages for the factory supervisor,
,controller, and custodians who work in the factory but not directly on products; and other
manufacturing costs, such as utilities, depreciation of manufacturing facilities, insurance, and property
taxes. - CORRECT ANSWER Manufacturing overhead.
Costs related to the production facility, including property taxes on the plant. - CORRECT ANSWER
Product costs.
Costs not related to the production facility. - CORRECT ANSWER Period costs.
Direct labor hours or machine hour time. - CORRECT ANSWER Ways to allocate
manufacturing overhead to a product.
An estimate of the overhead that will be incurred for each unit (in this case, allocated on the basis of
machine hours and direct labor hours). - CORRECT ANSWER Manufacturing overhead rate.
A temporary holding tank for overhead costs that you do not immediately know how to assign to
production. - CORRECT ANSWER Manufacturing overhead account.
How are actual manufacturing overhead costs incurred throughout the year journalized? - CORRECT
ANSWER Debits into the manufacturing overhead account.
Applied manufacturing overhead is directly recorded as a credit to which account? - CORRECT
ANSWER Manufacturing overhead.
How to close out the manufacturing overhead account at the end of the year? - CORRECT ANSWER
Apply to Cost of Goods Sold.
Overapplications of manufacturing overhead are corrected by ________ manufacturing overhead and
_________ cost of goods sold. - CORRECT ANSWER Debiting/crediting
Underapplications of manufacturing overhead are corrected by ________ manufacturing overhead
and _________ cost of goods sold. - CORRECT ANSWER Crediting/debiting
,Always recorded as debits to manufacturing overhead and credits to the different liability, asset, or
contra-asset accounts. - CORRECT ANSWER Actual manufacturing overhead expenditures.
Summarizes the cost flows in a manufacturing organization during a given period. This report
supports the cost of goods sold calculation on the income statement. - CORRECT ANSWER
Cost of Goods Manufactured schedule.
Raw materials used in production, direct labor, and applied manufacturing overhead. - CORRECT
ANSWER Included in COGM.
Total sales minus cost of goods sold or cost of revenues on the income statement. - CORRECT
ANSWER Gross margin.
Production costs for identical units are accumulated for a given period of time, e.g. one month, and
then the production volume is used to compute an overall average production cost per unit. -
CORRECT ANSWER Process costing.
All product costs necessary to "convert" raw materials into finished goods- direct labor and overhead.
- CORRECT ANSWER Conversion costs.
The sum of these components: one, cost of beginning work-in-process inventory, both materials and
conversion costs; two, the cost per equivalent unit required to complete those units in beginning
inventory, most or all of which is additional conversion cost; and three, the cost per equivalent unit of
the items started and completed this period, both materials and conversion costs. - CORRECT
ANSWER The cost associated with units completed and transferred out this period.
All the overhead costs associated with a particular overhead cost activity. - CORRECT ANSWER
Cost pool.
A numerical measure that reflects how much effort has gone into an activity. - CORRECT ANSWER
Cost driver.
Those overhead activities that are performed each time a unit is produced: machine maintenance,
machine depreciation, electricity and other energy costs. - CORRECT ANSWER Unit-level.
, Those overhead activities that are performed each time a new production batch is started or ended.
Inspections, machine setups,
movement of and accounting for materials. - CORRECT ANSWER Batch-level.
Those overhead activities that are associated with the capability to produce different types of
products. Engineering product design,
storage in special warehouses, managing by a special supervisor of all activities associated with a
particular product line, ordering, purchasing, and receiving materials unique to a particular product
line. - CORRECT ANSWER Product line level.
Those overhead activities that must be in place before any of the other production activities can take
place. Property taxes, factory insurance, security, landscaping, general accounting, general factory
administration. - CORRECT ANSWER Facility level.
Computed as the cost pool total divided by the number of cost driver events. - CORRECT ANSWER
Activity rate.
True or false: in an ABC system, direct labor hours can be used as a cost driver in some situations. -
CORRECT ANSWER True.
Equal to sales revenue minus variable costs. - CORRECT ANSWER Contribution margin.
Proportion of sales revenue represented by each of a company's products. - CORRECT ANSWER
Sales mix.
Direct Materials + Direct Labor + Applied Overhead - CORRECT ANSWER Total
Manufacturing Costs
Total Manufacturing Costs + Beginning WIP Inventory - Ending WIP Inventory - CORRECT
ANSWER COGM
COGM + Beginning Finished Goods Inventory - Ending Finished Goods Inventory - CORRECT
ANSWER Unadjusted COGS
Accounting Exam QUESTIONS AND
CORRECT ANSWERS
Miscellaneous materials like glue and nails would be classified as... - CORRECT ANSWER
Manufacturing overhead.
When the product or service provided can be considered as separate and distinct from other products
or services provided, and the manufacturing processes used are different for different products.
Doesn't track period costs. - CORRECT ANSWER Job order costing.
When a company must must track the costs of the product being produced or the service being
provided to be able to compare the cost of the product or service with the price the market is offering.
- CORRECT ANSWER Price-taker.
In cases where the product is customized and unique and the maker of the product is able to charge a
price based on costs and a markup. - CORRECT ANSWER Price-maker.
Examples of such companies include manufacturers of paint, soft drinks, and newspapers, and most
food processing plants. Other examples include large-scale tax preparation or loan processing firms,
such as H&R Block, preparing typical income tax returns for individuals. - CORRECT ANSWER
Process costing.
Direct materials, direct labor, and manufacturing overhead. - CORRECT ANSWER
Components tracked in job order costing.
The cost of raw materials that are used directly in the manufacture of products and are kept in the raw
materials warehouse until used. - CORRECT ANSWER Direct materials.
The wages and other payroll-related expenses of factory employees who work directly on products. -
CORRECT ANSWER Direct labor.
Includes all manufacturing costs that are not classified as direct materials or direct labor. This includes
miscellaneous materials used in production, such as glue or nails; wages for the factory supervisor,
,controller, and custodians who work in the factory but not directly on products; and other
manufacturing costs, such as utilities, depreciation of manufacturing facilities, insurance, and property
taxes. - CORRECT ANSWER Manufacturing overhead.
Costs related to the production facility, including property taxes on the plant. - CORRECT ANSWER
Product costs.
Costs not related to the production facility. - CORRECT ANSWER Period costs.
Direct labor hours or machine hour time. - CORRECT ANSWER Ways to allocate
manufacturing overhead to a product.
An estimate of the overhead that will be incurred for each unit (in this case, allocated on the basis of
machine hours and direct labor hours). - CORRECT ANSWER Manufacturing overhead rate.
A temporary holding tank for overhead costs that you do not immediately know how to assign to
production. - CORRECT ANSWER Manufacturing overhead account.
How are actual manufacturing overhead costs incurred throughout the year journalized? - CORRECT
ANSWER Debits into the manufacturing overhead account.
Applied manufacturing overhead is directly recorded as a credit to which account? - CORRECT
ANSWER Manufacturing overhead.
How to close out the manufacturing overhead account at the end of the year? - CORRECT ANSWER
Apply to Cost of Goods Sold.
Overapplications of manufacturing overhead are corrected by ________ manufacturing overhead and
_________ cost of goods sold. - CORRECT ANSWER Debiting/crediting
Underapplications of manufacturing overhead are corrected by ________ manufacturing overhead
and _________ cost of goods sold. - CORRECT ANSWER Crediting/debiting
,Always recorded as debits to manufacturing overhead and credits to the different liability, asset, or
contra-asset accounts. - CORRECT ANSWER Actual manufacturing overhead expenditures.
Summarizes the cost flows in a manufacturing organization during a given period. This report
supports the cost of goods sold calculation on the income statement. - CORRECT ANSWER
Cost of Goods Manufactured schedule.
Raw materials used in production, direct labor, and applied manufacturing overhead. - CORRECT
ANSWER Included in COGM.
Total sales minus cost of goods sold or cost of revenues on the income statement. - CORRECT
ANSWER Gross margin.
Production costs for identical units are accumulated for a given period of time, e.g. one month, and
then the production volume is used to compute an overall average production cost per unit. -
CORRECT ANSWER Process costing.
All product costs necessary to "convert" raw materials into finished goods- direct labor and overhead.
- CORRECT ANSWER Conversion costs.
The sum of these components: one, cost of beginning work-in-process inventory, both materials and
conversion costs; two, the cost per equivalent unit required to complete those units in beginning
inventory, most or all of which is additional conversion cost; and three, the cost per equivalent unit of
the items started and completed this period, both materials and conversion costs. - CORRECT
ANSWER The cost associated with units completed and transferred out this period.
All the overhead costs associated with a particular overhead cost activity. - CORRECT ANSWER
Cost pool.
A numerical measure that reflects how much effort has gone into an activity. - CORRECT ANSWER
Cost driver.
Those overhead activities that are performed each time a unit is produced: machine maintenance,
machine depreciation, electricity and other energy costs. - CORRECT ANSWER Unit-level.
, Those overhead activities that are performed each time a new production batch is started or ended.
Inspections, machine setups,
movement of and accounting for materials. - CORRECT ANSWER Batch-level.
Those overhead activities that are associated with the capability to produce different types of
products. Engineering product design,
storage in special warehouses, managing by a special supervisor of all activities associated with a
particular product line, ordering, purchasing, and receiving materials unique to a particular product
line. - CORRECT ANSWER Product line level.
Those overhead activities that must be in place before any of the other production activities can take
place. Property taxes, factory insurance, security, landscaping, general accounting, general factory
administration. - CORRECT ANSWER Facility level.
Computed as the cost pool total divided by the number of cost driver events. - CORRECT ANSWER
Activity rate.
True or false: in an ABC system, direct labor hours can be used as a cost driver in some situations. -
CORRECT ANSWER True.
Equal to sales revenue minus variable costs. - CORRECT ANSWER Contribution margin.
Proportion of sales revenue represented by each of a company's products. - CORRECT ANSWER
Sales mix.
Direct Materials + Direct Labor + Applied Overhead - CORRECT ANSWER Total
Manufacturing Costs
Total Manufacturing Costs + Beginning WIP Inventory - Ending WIP Inventory - CORRECT
ANSWER COGM
COGM + Beginning Finished Goods Inventory - Ending Finished Goods Inventory - CORRECT
ANSWER Unadjusted COGS
