WGU C253 Advanced Managerial
Accounting Latest Exam And All Correct
Answers.
Absorption costing - Answer A costing method that includes all manufacturing costs—direct materials,
direct labor, and both variable and fixed manufacturing overhead—in unit product costs.
Activity - Answer An event that causes the consumption of overhead resources in an organization.
Activity base - Answer A measure of whatever causes the incurrence of a variable cost. For example,
the total cost of surgical gloves in a hospital will increase as the number of surgeries increases.
Therefore, the number of surgeries is the activity base that explains the total cost of surgical gloves.
Activity cost pool - Answer A "bucket" in which costs are accumulated that relate to a single activity
measure in an activity-based costing system.
Activity measure - Answer An allocation base in an activity-based costing system; ideally, a measure of
the amount of activity that drives the costs in an activity cost pool.
Activity variance - Answer The difference between a revenue or cost item in the flexible budget and the
same item in the static planning budget. An activity variance is due solely to the difference between the
actual level of activity used in the flexible budget and the level of activity assumed in the planning
budget.
Activity-based costing (ABC) - Answer A costing method based on activities that is designed to provide
managers with cost information for strategic and other decisions that potentially affect capacity and
therefore fixed as well as variable costs.
Activity-based management (ABM) - Answer A management approach that focuses on managing
activities as a way of eliminating waste and reducing delays and defects.
,Administrative costs - Answer All executive, organizational, and clerical costs associated with the
general management of an organization rather than with manufacturing or selling.
Allocation base - Answer A measure of activity such as direct labor-hours or machine-hours that is used
to assign costs to cost objects.
Avoidable cost - Answer A cost that can be eliminated by choosing one alternative over another in a
decision. This term is synonymous with differential cost and relevant cost.
Batch-level activities - Answer Activities that are performed each time a batch of goods is handled or
processed, regardless of how many units are in the batch. The amount of resource consumed depends
on the number of batches run rather than on the number of units in the batch.
Benchmarking - Answer A systematic approach to identifying the activities with the greatest potential
for improvement.
Bill of materials - Answer A document that shows the quantity of each type of direct material required
to make a product.
Bottleneck - Answer A machine or some other part of a process that limits the total output of the
entire system.
Break-even point - Answer The level of sales at which profit is zero.
Budget - Answer A detailed plan for the future that is usually expressed in formal quantitative terms.
Capital budgeting - Answer The process of planning significant investments in projects that have long-
term implications such as the purchase of new equipment or the introduction of a new product.
Cash budget - Answer A detailed plan showing how cash resources will be acquired and used over a
specific time period.
, Committed fixed costs - Answer Investments in facilities, equipment, and basic organizational structure
that can't be significantly reduced even for short periods of time without making fundamental changes.
Common cost - Answer A cost that is incurred to support a number of cost objects but that cannot be
traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of
all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But
no part of the pilot's wage is caused by any one passenger taking the flight.
Common fixed cost - Answer A fixed cost that supports more than one business segment, but is not
traceable in whole or in part to any one of the business segments.
Constraint - Answer A limitation under which a company must operate, such as limited available
machine time or raw materials, that restricts the company's ability to satisfy demand.
Contribution approach - Answer An income statement format that organizes costs by their behavior.
Costs are separated into variable and fixed categories rather than being separated into product and
period costs for external reporting purposes
Contribution margin - Answer The amount remaining from sales revenues after all variable expenses
have been deducted.
Contribution margin ratio (CM ratio) - Answer A ratio computed by dividing contribution margin by
sales.
Control - Answer The process of gathering feedback to ensure that a plan is being properly executed or
modified as circumstances change.
Conversion cost - Answer Direct labor cost plus manufacturing overhead cost.
Cost behavior - Answer The way in which a cost reacts to changes in the level of activity.
Cost driver - Answer A factor, such as machine-hours, beds occupied, computer time, or flight-hours,
that causes overhead costs.
Accounting Latest Exam And All Correct
Answers.
Absorption costing - Answer A costing method that includes all manufacturing costs—direct materials,
direct labor, and both variable and fixed manufacturing overhead—in unit product costs.
Activity - Answer An event that causes the consumption of overhead resources in an organization.
Activity base - Answer A measure of whatever causes the incurrence of a variable cost. For example,
the total cost of surgical gloves in a hospital will increase as the number of surgeries increases.
Therefore, the number of surgeries is the activity base that explains the total cost of surgical gloves.
Activity cost pool - Answer A "bucket" in which costs are accumulated that relate to a single activity
measure in an activity-based costing system.
Activity measure - Answer An allocation base in an activity-based costing system; ideally, a measure of
the amount of activity that drives the costs in an activity cost pool.
Activity variance - Answer The difference between a revenue or cost item in the flexible budget and the
same item in the static planning budget. An activity variance is due solely to the difference between the
actual level of activity used in the flexible budget and the level of activity assumed in the planning
budget.
Activity-based costing (ABC) - Answer A costing method based on activities that is designed to provide
managers with cost information for strategic and other decisions that potentially affect capacity and
therefore fixed as well as variable costs.
Activity-based management (ABM) - Answer A management approach that focuses on managing
activities as a way of eliminating waste and reducing delays and defects.
,Administrative costs - Answer All executive, organizational, and clerical costs associated with the
general management of an organization rather than with manufacturing or selling.
Allocation base - Answer A measure of activity such as direct labor-hours or machine-hours that is used
to assign costs to cost objects.
Avoidable cost - Answer A cost that can be eliminated by choosing one alternative over another in a
decision. This term is synonymous with differential cost and relevant cost.
Batch-level activities - Answer Activities that are performed each time a batch of goods is handled or
processed, regardless of how many units are in the batch. The amount of resource consumed depends
on the number of batches run rather than on the number of units in the batch.
Benchmarking - Answer A systematic approach to identifying the activities with the greatest potential
for improvement.
Bill of materials - Answer A document that shows the quantity of each type of direct material required
to make a product.
Bottleneck - Answer A machine or some other part of a process that limits the total output of the
entire system.
Break-even point - Answer The level of sales at which profit is zero.
Budget - Answer A detailed plan for the future that is usually expressed in formal quantitative terms.
Capital budgeting - Answer The process of planning significant investments in projects that have long-
term implications such as the purchase of new equipment or the introduction of a new product.
Cash budget - Answer A detailed plan showing how cash resources will be acquired and used over a
specific time period.
, Committed fixed costs - Answer Investments in facilities, equipment, and basic organizational structure
that can't be significantly reduced even for short periods of time without making fundamental changes.
Common cost - Answer A cost that is incurred to support a number of cost objects but that cannot be
traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of
all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But
no part of the pilot's wage is caused by any one passenger taking the flight.
Common fixed cost - Answer A fixed cost that supports more than one business segment, but is not
traceable in whole or in part to any one of the business segments.
Constraint - Answer A limitation under which a company must operate, such as limited available
machine time or raw materials, that restricts the company's ability to satisfy demand.
Contribution approach - Answer An income statement format that organizes costs by their behavior.
Costs are separated into variable and fixed categories rather than being separated into product and
period costs for external reporting purposes
Contribution margin - Answer The amount remaining from sales revenues after all variable expenses
have been deducted.
Contribution margin ratio (CM ratio) - Answer A ratio computed by dividing contribution margin by
sales.
Control - Answer The process of gathering feedback to ensure that a plan is being properly executed or
modified as circumstances change.
Conversion cost - Answer Direct labor cost plus manufacturing overhead cost.
Cost behavior - Answer The way in which a cost reacts to changes in the level of activity.
Cost driver - Answer A factor, such as machine-hours, beds occupied, computer time, or flight-hours,
that causes overhead costs.
