WGU D559 Advanced Managerial Accounting: Exam 2
50 questions
1. The potential benefit given up when one alternative is chosen over another is a(n):
A. Opportunity cost
B. Sunk cost
C. Period cost
D. Prime cost
Correct Answer: A. Opportunity cost
Rationale: It is not recorded in the accounts but matters for decisions.
2. As activity increases within the relevant range, fixed cost per unit:
A. Increases
B. Decreases
C. Remains constant
D. Becomes variable
Correct Answer: B. Decreases
Rationale: The same total is spread over more units.
3. Beginning work in process $16,000; direct materials used $60,000; direct labor $85,000;
manufacturing overhead applied $85,000; ending work in process $25,000. What is cost of goods
manufactured?
A. $230,000
B. $221,000
C. $271,000
D. $205,000
Correct Answer: B. $221,000
Rationale: COGM = $16,000 + $60,000 + $85,000 + $85,000 - $25,000 = $221,000.
4. A manufacturer reports direct materials of $40,000, direct labor of $45,000 and manufacturing
overhead of $80,000. What is conversion cost?
A. $85,000
B. $125,000
C. $165,000
D. $120,000
Correct Answer: B. $125,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
5. Beginning finished goods $35,000, cost of goods manufactured $475,000, ending finished
goods $44,000. What is cost of goods sold?
A. $475,000
B. $554,000
C. $484,000
D. $466,000
Correct Answer: D. $466,000
Rationale: COGS = $35,000 + $475,000 - $44,000 = $466,000.
, 6. A traditional (absorption) income statement classifies costs by:
A. Behavior
B. Traceability
C. Controllability
D. Function
Correct Answer: D. Function
Rationale: It shows gross margin, not contribution margin.
7. In regression output, R-squared indicates:
A. The fixed cost per period
B. The variable cost per unit
C. The proportion of variation in cost explained by the activity base
D. The break-even point
Correct Answer: C. The proportion of variation in cost explained by the activity base
Rationale: Higher R-squared means a better fit.
8. A product sells for $105 and has variable costs of $68.25 per unit. What is the contribution
margin ratio?
A. 65.0%
B. 53.8%
C. 46.2%
D. 35.0%
Correct Answer: D. 35.0%
Rationale: CM ratio = ($105 - $68.25) / $105 = 35.0%.
9. When direct labor is used on jobs, its cost is debited to:
A. Manufacturing Overhead
B. Finished Goods
C. Salaries Expense
D. Work in Process
Correct Answer: D. Work in Process
Rationale: Direct costs go straight to WIP.
10. The predetermined overhead rate is calculated:
A. At the end of the period using actual costs
B. Before the period begins, using estimated overhead and estimated activity
C. Each time a job is finished
D. Using actual overhead and estimated activity
Correct Answer: B. Before the period begins, using estimated overhead and estimated
activity
Rationale: It allows timely costing of jobs.
11. The predetermined overhead rate is $10 per direct labor-hour. Actual direct labor-hours were
24,000 and actual overhead was $236,000. What is the over- or underapplied overhead?
A. $4,000 overapplied
B. $4,000 underapplied
C. $8,000 overapplied
D. $6,000 underapplied
Correct Answer: A. $4,000 overapplied
Rationale: Applied = $10 x 24,000 = $240,000; actual $236,000 - applied = -$4,000, so overhead is
overapplied.
50 questions
1. The potential benefit given up when one alternative is chosen over another is a(n):
A. Opportunity cost
B. Sunk cost
C. Period cost
D. Prime cost
Correct Answer: A. Opportunity cost
Rationale: It is not recorded in the accounts but matters for decisions.
2. As activity increases within the relevant range, fixed cost per unit:
A. Increases
B. Decreases
C. Remains constant
D. Becomes variable
Correct Answer: B. Decreases
Rationale: The same total is spread over more units.
3. Beginning work in process $16,000; direct materials used $60,000; direct labor $85,000;
manufacturing overhead applied $85,000; ending work in process $25,000. What is cost of goods
manufactured?
A. $230,000
B. $221,000
C. $271,000
D. $205,000
Correct Answer: B. $221,000
Rationale: COGM = $16,000 + $60,000 + $85,000 + $85,000 - $25,000 = $221,000.
4. A manufacturer reports direct materials of $40,000, direct labor of $45,000 and manufacturing
overhead of $80,000. What is conversion cost?
A. $85,000
B. $125,000
C. $165,000
D. $120,000
Correct Answer: B. $125,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
5. Beginning finished goods $35,000, cost of goods manufactured $475,000, ending finished
goods $44,000. What is cost of goods sold?
A. $475,000
B. $554,000
C. $484,000
D. $466,000
Correct Answer: D. $466,000
Rationale: COGS = $35,000 + $475,000 - $44,000 = $466,000.
, 6. A traditional (absorption) income statement classifies costs by:
A. Behavior
B. Traceability
C. Controllability
D. Function
Correct Answer: D. Function
Rationale: It shows gross margin, not contribution margin.
7. In regression output, R-squared indicates:
A. The fixed cost per period
B. The variable cost per unit
C. The proportion of variation in cost explained by the activity base
D. The break-even point
Correct Answer: C. The proportion of variation in cost explained by the activity base
Rationale: Higher R-squared means a better fit.
8. A product sells for $105 and has variable costs of $68.25 per unit. What is the contribution
margin ratio?
A. 65.0%
B. 53.8%
C. 46.2%
D. 35.0%
Correct Answer: D. 35.0%
Rationale: CM ratio = ($105 - $68.25) / $105 = 35.0%.
9. When direct labor is used on jobs, its cost is debited to:
A. Manufacturing Overhead
B. Finished Goods
C. Salaries Expense
D. Work in Process
Correct Answer: D. Work in Process
Rationale: Direct costs go straight to WIP.
10. The predetermined overhead rate is calculated:
A. At the end of the period using actual costs
B. Before the period begins, using estimated overhead and estimated activity
C. Each time a job is finished
D. Using actual overhead and estimated activity
Correct Answer: B. Before the period begins, using estimated overhead and estimated
activity
Rationale: It allows timely costing of jobs.
11. The predetermined overhead rate is $10 per direct labor-hour. Actual direct labor-hours were
24,000 and actual overhead was $236,000. What is the over- or underapplied overhead?
A. $4,000 overapplied
B. $4,000 underapplied
C. $8,000 overapplied
D. $6,000 underapplied
Correct Answer: A. $4,000 overapplied
Rationale: Applied = $10 x 24,000 = $240,000; actual $236,000 - applied = -$4,000, so overhead is
overapplied.
