WGU D101 COST AND MANAGERIAL
ACCOUNTING PA CERTIFICATION
PREPARATION GUIDE
◉ 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.
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.
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.
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.
Answer: Process costing.
◉ Direct materials, direct labor, and manufacturing overhead.
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.
Answer: Direct materials.
◉ The wages and other payroll-related expenses of factory
employees who work directly on products.
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.
Answer: Manufacturing overhead.
,◉ Costs related to the production facility, including property taxes
on the plant.
Answer: Product costs.
◉ Costs not related to the production facility.
Answer: Period costs.
◉ Direct labor hours or machine hour time.
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).
Answer: Manufacturing overhead rate.
◉ A temporary holding tank for overhead costs that you do not
immediately know how to assign to production.
Answer: Manufacturing overhead account.
◉ How are actual manufacturing overhead costs incurred
throughout the year journalized?
Answer: Debits into the manufacturing overhead account.
, ◉ Applied manufacturing overhead is directly recorded as a credit to
which account?
Answer: Manufacturing overhead.
◉ How to close out the manufacturing overhead account at the end
of the year?
Answer: Apply to Cost of Goods Sold.
◉ Overapplications of manufacturing overhead are corrected by
________ manufacturing overhead and _________ cost of goods sold.
Answer: Debiting/crediting
◉ Underapplications of manufacturing overhead are corrected by
________ manufacturing overhead and _________ cost of goods sold.
Answer: Crediting/debiting
◉ Always recorded as debits to manufacturing overhead and credits
to the different liability, asset, or contra-asset accounts.
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.
ACCOUNTING PA CERTIFICATION
PREPARATION GUIDE
◉ 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.
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.
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.
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.
Answer: Process costing.
◉ Direct materials, direct labor, and manufacturing overhead.
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.
Answer: Direct materials.
◉ The wages and other payroll-related expenses of factory
employees who work directly on products.
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.
Answer: Manufacturing overhead.
,◉ Costs related to the production facility, including property taxes
on the plant.
Answer: Product costs.
◉ Costs not related to the production facility.
Answer: Period costs.
◉ Direct labor hours or machine hour time.
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).
Answer: Manufacturing overhead rate.
◉ A temporary holding tank for overhead costs that you do not
immediately know how to assign to production.
Answer: Manufacturing overhead account.
◉ How are actual manufacturing overhead costs incurred
throughout the year journalized?
Answer: Debits into the manufacturing overhead account.
, ◉ Applied manufacturing overhead is directly recorded as a credit to
which account?
Answer: Manufacturing overhead.
◉ How to close out the manufacturing overhead account at the end
of the year?
Answer: Apply to Cost of Goods Sold.
◉ Overapplications of manufacturing overhead are corrected by
________ manufacturing overhead and _________ cost of goods sold.
Answer: Debiting/crediting
◉ Underapplications of manufacturing overhead are corrected by
________ manufacturing overhead and _________ cost of goods sold.
Answer: Crediting/debiting
◉ Always recorded as debits to manufacturing overhead and credits
to the different liability, asset, or contra-asset accounts.
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.
