WGU C214 Managerial Accounting Week 8
Final Exam Complete Actual Exam Questions
Practice Exam – Version 1
1. Which of the following is a characteristic of managerial accounting?
A. It is prepared according to GAAP.
B. It is intended for external users.
C. It is future-oriented and provides information for internal decision-making.
D. It is only prepared annually.
Correct Answer: C
Rationale: Managerial accounting is future-oriented and provides information to
internal users (managers) for decision-making, planning, and control. Financial
accounting is prepared according to GAAP and intended for external users.
2. Which of the following is a direct cost of manufacturing a product?
A. Factory rent
B. Direct materials
C. Factory supervisor salary
D. Depreciation on factory equipment
Correct Answer: B
Rationale: Direct materials are a direct cost because they can be easily traced to
the product. Factory rent, supervisor salary, and depreciation are manufacturing
overhead (indirect costs).
3. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Selling and administrative expenses
D. Manufacturing overhead
Correct Answer: C
,Rationale: Period costs are expensed in the period incurred and include selling
and administrative expenses. Direct materials, direct labor, and manufacturing
overhead are product costs.
4. Which of the following is an example of a variable cost?
A. Factory rent
B. Direct materials
C. Property taxes
D. Depreciation on factory equipment
Correct Answer: B
Rationale: Variable costs change in total with changes in production volume.
Direct materials are a variable cost. Factory rent, property taxes, and
depreciation are fixed costs.
5. Which of the following is an example of a fixed cost?
A. Direct materials
B. Direct labor
C. Factory rent
D. Sales commissions
Correct Answer: C
Rationale: Fixed costs remain constant in total regardless of production volume.
Factory rent is a fixed cost. Direct materials, direct labor, and sales commissions
are variable costs.
6. Which of the following is the correct formula for calculating contribution margin?
A. Sales − Cost of goods sold
B. Sales − Variable costs
C. Sales − Fixed costs
D. Sales − Operating expenses
Correct Answer: B
,Rationale: Contribution margin = Sales − Variable costs. It represents the
amount available to cover fixed costs and generate profit.
7. A company has sales of $500,000, variable costs of $200,000, and fixed costs of $150,000. What is
the contribution margin?
A. $150,000
B. $300,000
C. $350,000
D. $500,000
Correct Answer: B
Rationale: Contribution margin = Sales − Variable costs = $500,000 − $200,000
= $300,000.
8. A company has sales of $500,000, variable costs of $200,000, and fixed costs of $150,000. What is
the net operating income?
A. $150,000
B. $300,000
C. $350,000
D. $500,000
Correct Answer: A
Rationale: Net operating income = Contribution margin − Fixed costs = $300,000
− $150,000 = $150,000.
9. Which of the following is the correct formula for calculating the break-even point in units?
A. Fixed costs / Contribution margin per unit
B. Fixed costs / Selling price per unit
C. Variable costs / Contribution margin per unit
D. Fixed costs / Variable cost per unit
Correct Answer: A
Rationale: Break-even point in units = Fixed costs / Contribution margin per unit.
This calculates the number of units that must be sold to cover all costs.
, 10. A company has fixed costs of $100,000 and a contribution margin per unit of $25. What is the
break-even point in units?
A. 2,500 units
B. 4,000 units
C. 5,000 units
D. 10,000 units
Correct Answer: B
Rationale: Break-even point in units = Fixed costs / Contribution margin per unit
= $100,000 / $25 = 4,000 units.
11. Which of the following is the correct formula for calculating the margin of safety?
A. Actual sales − Break-even sales
B. Actual sales + Break-even sales
C. Break-even sales − Actual sales
D. Fixed costs / Contribution margin
Correct Answer: A
Rationale: Margin of safety = Actual sales − Break-even sales. It represents the
amount by which sales can drop before the company incurs a loss.
12. Which of the following is a relevant cost for decision-making?
A. Sunk cost
B. Opportunity cost
C. Historical cost
D. Allocated fixed cost
Correct Answer: B
Rationale: Opportunity cost is a relevant cost because it represents the benefit
forgone by choosing one alternative over another. Sunk costs, historical costs,
and allocated fixed costs are not relevant for decision-making.
13. Which of the following is an example of a sunk cost?
A. Future rent payments
B. Cost of equipment already purchased
Final Exam Complete Actual Exam Questions
Practice Exam – Version 1
1. Which of the following is a characteristic of managerial accounting?
A. It is prepared according to GAAP.
B. It is intended for external users.
C. It is future-oriented and provides information for internal decision-making.
D. It is only prepared annually.
Correct Answer: C
Rationale: Managerial accounting is future-oriented and provides information to
internal users (managers) for decision-making, planning, and control. Financial
accounting is prepared according to GAAP and intended for external users.
2. Which of the following is a direct cost of manufacturing a product?
A. Factory rent
B. Direct materials
C. Factory supervisor salary
D. Depreciation on factory equipment
Correct Answer: B
Rationale: Direct materials are a direct cost because they can be easily traced to
the product. Factory rent, supervisor salary, and depreciation are manufacturing
overhead (indirect costs).
3. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Selling and administrative expenses
D. Manufacturing overhead
Correct Answer: C
,Rationale: Period costs are expensed in the period incurred and include selling
and administrative expenses. Direct materials, direct labor, and manufacturing
overhead are product costs.
4. Which of the following is an example of a variable cost?
A. Factory rent
B. Direct materials
C. Property taxes
D. Depreciation on factory equipment
Correct Answer: B
Rationale: Variable costs change in total with changes in production volume.
Direct materials are a variable cost. Factory rent, property taxes, and
depreciation are fixed costs.
5. Which of the following is an example of a fixed cost?
A. Direct materials
B. Direct labor
C. Factory rent
D. Sales commissions
Correct Answer: C
Rationale: Fixed costs remain constant in total regardless of production volume.
Factory rent is a fixed cost. Direct materials, direct labor, and sales commissions
are variable costs.
6. Which of the following is the correct formula for calculating contribution margin?
A. Sales − Cost of goods sold
B. Sales − Variable costs
C. Sales − Fixed costs
D. Sales − Operating expenses
Correct Answer: B
,Rationale: Contribution margin = Sales − Variable costs. It represents the
amount available to cover fixed costs and generate profit.
7. A company has sales of $500,000, variable costs of $200,000, and fixed costs of $150,000. What is
the contribution margin?
A. $150,000
B. $300,000
C. $350,000
D. $500,000
Correct Answer: B
Rationale: Contribution margin = Sales − Variable costs = $500,000 − $200,000
= $300,000.
8. A company has sales of $500,000, variable costs of $200,000, and fixed costs of $150,000. What is
the net operating income?
A. $150,000
B. $300,000
C. $350,000
D. $500,000
Correct Answer: A
Rationale: Net operating income = Contribution margin − Fixed costs = $300,000
− $150,000 = $150,000.
9. Which of the following is the correct formula for calculating the break-even point in units?
A. Fixed costs / Contribution margin per unit
B. Fixed costs / Selling price per unit
C. Variable costs / Contribution margin per unit
D. Fixed costs / Variable cost per unit
Correct Answer: A
Rationale: Break-even point in units = Fixed costs / Contribution margin per unit.
This calculates the number of units that must be sold to cover all costs.
, 10. A company has fixed costs of $100,000 and a contribution margin per unit of $25. What is the
break-even point in units?
A. 2,500 units
B. 4,000 units
C. 5,000 units
D. 10,000 units
Correct Answer: B
Rationale: Break-even point in units = Fixed costs / Contribution margin per unit
= $100,000 / $25 = 4,000 units.
11. Which of the following is the correct formula for calculating the margin of safety?
A. Actual sales − Break-even sales
B. Actual sales + Break-even sales
C. Break-even sales − Actual sales
D. Fixed costs / Contribution margin
Correct Answer: A
Rationale: Margin of safety = Actual sales − Break-even sales. It represents the
amount by which sales can drop before the company incurs a loss.
12. Which of the following is a relevant cost for decision-making?
A. Sunk cost
B. Opportunity cost
C. Historical cost
D. Allocated fixed cost
Correct Answer: B
Rationale: Opportunity cost is a relevant cost because it represents the benefit
forgone by choosing one alternative over another. Sunk costs, historical costs,
and allocated fixed costs are not relevant for decision-making.
13. Which of the following is an example of a sunk cost?
A. Future rent payments
B. Cost of equipment already purchased
