WGU D101 COST AND MANAGERIAL
ACCOUNTING PA EXAM REVIEW STUDY
NOTES
◉ 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.
,Answer: Cost of Goods Manufactured schedule.
◉ Raw materials used in production, direct labor, and applied
manufacturing overhead.
Answer: Included in COGM.
◉ Total sales minus cost of goods sold or cost of revenues on the
income statement.
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.
Answer: Process costing.
◉ All product costs necessary to "convert" raw materials into
finished goods- direct labor and overhead.
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.
Answer: The cost associated with units completed and transferred
out this period.
◉ All the overhead costs associated with a particular overhead cost
activity.
Answer: Cost pool.
◉ A numerical measure that reflects how much effort has gone into
an activity.
Answer: Cost driver.
◉ Those overhead activities that are performed each time a unit is
produced: machine maintenance, machine depreciation, electricity
and other energy costs.
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.
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.
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.
Answer: Facility level.
◉ Computed as the cost pool total divided by the number of cost
driver events.
Answer: Activity rate.
◉ True or false: in an ABC system, direct labor hours can be used as
a cost driver in some situations.
Answer: True.
◉ Equal to sales revenue minus variable costs.
Answer: Contribution margin.
ACCOUNTING PA EXAM REVIEW STUDY
NOTES
◉ 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.
,Answer: Cost of Goods Manufactured schedule.
◉ Raw materials used in production, direct labor, and applied
manufacturing overhead.
Answer: Included in COGM.
◉ Total sales minus cost of goods sold or cost of revenues on the
income statement.
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.
Answer: Process costing.
◉ All product costs necessary to "convert" raw materials into
finished goods- direct labor and overhead.
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.
Answer: The cost associated with units completed and transferred
out this period.
◉ All the overhead costs associated with a particular overhead cost
activity.
Answer: Cost pool.
◉ A numerical measure that reflects how much effort has gone into
an activity.
Answer: Cost driver.
◉ Those overhead activities that are performed each time a unit is
produced: machine maintenance, machine depreciation, electricity
and other energy costs.
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.
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.
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.
Answer: Facility level.
◉ Computed as the cost pool total divided by the number of cost
driver events.
Answer: Activity rate.
◉ True or false: in an ABC system, direct labor hours can be used as
a cost driver in some situations.
Answer: True.
◉ Equal to sales revenue minus variable costs.
Answer: Contribution margin.
