ESTUDYR
WGU D101 COST AND MANAGERIAL ACCOUNTING EXAM ACTUAL EXAM 2 VERSIONS
(VERSION A AND B) COMPLETE 400+ QUESTIONS WITH DETAILED VERIFIED ANSWERS (100%
CORRECT ANSWERS) / WITH RATIONALES
1. What is a price taker?
a) A company that can set the market price for a good.
b) A company that has to accept the price that the market sets for a good.
c) A company that creates new market prices by innovation.
d) A company that sets prices for competitors.
Answer: b) A company that has to accept the price that the market sets for a good.
Rationale: Price takers lack influence over market prices, accepting them as given based on market
conditions.
2. What is a price maker?
a) A firm that must accept market prices.
b) A firm that has no control over pricing decisions.
c) A firm possessing the power to set prices within the market.
d) A firm unable to monitor costs for profitability.
Answer: c) A firm possessing the power to set prices within the market.
Rationale: Price makers have market power to influence prices, provided they track costs for
profitability.
3. What is the major purpose and use of job order costing?
a) To track both manufacturing and period costs and assign both to products.
b) To track manufacturing costs by period instead of by products.
c) To accumulate manufacturing costs by separate product orders or batches.
d) To be used exclusively by price makers and not by price takers.
Answer: c) To accumulate manufacturing costs by separate product orders or batches.
Rationale: Job order costing focuses on tracking costs for distinct products or jobs.
4. Which statement is true?
a) Having accurate product or service cost information is important for both price takers and price
makers.
,ESTUDYR
b) Accurate product cost information is only important for price takers.
c) Accurate product cost information is not important for either price takers or price makers.
d) Accurate product cost information is only important for price makers.
Answer: a) Having accurate product or service cost information is important for both price takers and
price makers.
Rationale: Both types of companies rely on accurate cost data for profitability and decision-making.
5. Why might one competitor with accurate product cost information be more successful than another
without it?
a) They can undercut competitors’ prices, driving them out of business.
b) They can set profitable prices, identify cost inefficiencies, and improve overall operations.
c) They can pay higher wages to employees.
d) They can set higher prices and earn more profits.
Answer: b) They can set profitable prices, identify cost inefficiencies, and improve overall operations.
Rationale: Accurate cost data enables better pricing strategies, operational efficiency, and profitability.
6. Job order costing is appropriate when which two conditions exist?
a) Products are identical, and processes are the same.
b) Products are distinct, and processes differ for different products.
c) Products are distinct, but processes are the same.
d) Products are identical, but processes differ.
Answer: b) Products are distinct, and processes differ for different products.
Rationale: Job order costing applies to customized products requiring varied processes.
7. Why is having accurate product cost information important?
a) To charge a price based on costs and a reasonable markup.
b) To minimize profits.
c) To estimate costs without considering a markup.
d) To grow faster than competitors.
Answer: a) To charge a price based on costs and a reasonable markup.
Rationale: Accurate cost information ensures products are priced for profitability.
,ESTUDYR
8. Which type of company should use job order costing?
a) Air filter manufacturer
b) Soda bottler
c) Paper towel manufacturer
d) Commercial aircraft manufacturer
Answer: d) Commercial aircraft manufacturer
Rationale: Job order costing is ideal for custom, high-cost products like aircraft.
9. What is a condition to using job order costing?
a) Tracking total direct materials for a given period of time.
b) Having no manufacturing overhead assigned to product costs.
c) Tracking total direct labor costs for a period of time.
d) Identifying each specific job or product manufactured.
Answer: d) Identifying each specific job or product manufactured.
Rationale: Specific job identification is critical in job order costing to track costs accurately.
10. Which costs should be assigned to each product under a job order costing system?
a) Direct materials, direct labor, and manufacturing overhead.
b) Direct labor, manufacturing overhead, and administrative expenses.
c) Direct materials, direct labor, and administrative expenses.
d) Manufacturing overhead, administrative expenses, and depreciation of office buildings.
Answer: a) Direct materials, direct labor, and manufacturing overhead.
Rationale: These are the primary components of product costs in job order costing.
11. Which company should use a job ordering costing system?
a) Manufacturer of custom furniture
b) Manufacturer of paint
c) Food processing plant
d) Loan processing firm
Answer: a) Manufacturer of custom furniture
Rationale: Job order costing is suited for companies producing customized products.
, ESTUDYR
12. The profitability of each separate job or product can only be tracked using which product costing
system?
a) Process costing
b) Average unit costing
c) Profitability costing
d) Job order costing
Answer: d) Job order costing
Rationale: Only job order costing tracks costs and profitability by specific job or product.
13. A company producing mass quantities of identical goods should use which costing system?
a) Job order costing
b) Process costing
c) Activity-based costing
d) Standard costing
Answer: b) Process costing
Rationale: Process costing is suitable for industries producing uniform products in large volumes.
14. What is the primary focus of process costing?
a) Tracking costs by job or batch.
b) Allocating costs to mass-produced units.
c) Identifying non-manufacturing costs.
d) Tracking profitability by service.
Answer: b) Allocating costs to mass-produced units.
Rationale: Process costing averages costs across identical units.
15. What is the primary distinction between job order costing and process costing?
a) Job order costing tracks costs by product orders, while process costing averages costs over large
quantities of similar products.
b) Job order costing focuses on direct materials only, while process costing tracks all costs.
c) Job order costing is only used by service industries, while process costing is used by manufacturers.
d) Job order costing applies to mass production, while process costing applies to custom products.
Answer: a) Job order costing tracks costs by product orders, while process costing averages costs over
large quantities of similar products.
WGU D101 COST AND MANAGERIAL ACCOUNTING EXAM ACTUAL EXAM 2 VERSIONS
(VERSION A AND B) COMPLETE 400+ QUESTIONS WITH DETAILED VERIFIED ANSWERS (100%
CORRECT ANSWERS) / WITH RATIONALES
1. What is a price taker?
a) A company that can set the market price for a good.
b) A company that has to accept the price that the market sets for a good.
c) A company that creates new market prices by innovation.
d) A company that sets prices for competitors.
Answer: b) A company that has to accept the price that the market sets for a good.
Rationale: Price takers lack influence over market prices, accepting them as given based on market
conditions.
2. What is a price maker?
a) A firm that must accept market prices.
b) A firm that has no control over pricing decisions.
c) A firm possessing the power to set prices within the market.
d) A firm unable to monitor costs for profitability.
Answer: c) A firm possessing the power to set prices within the market.
Rationale: Price makers have market power to influence prices, provided they track costs for
profitability.
3. What is the major purpose and use of job order costing?
a) To track both manufacturing and period costs and assign both to products.
b) To track manufacturing costs by period instead of by products.
c) To accumulate manufacturing costs by separate product orders or batches.
d) To be used exclusively by price makers and not by price takers.
Answer: c) To accumulate manufacturing costs by separate product orders or batches.
Rationale: Job order costing focuses on tracking costs for distinct products or jobs.
4. Which statement is true?
a) Having accurate product or service cost information is important for both price takers and price
makers.
,ESTUDYR
b) Accurate product cost information is only important for price takers.
c) Accurate product cost information is not important for either price takers or price makers.
d) Accurate product cost information is only important for price makers.
Answer: a) Having accurate product or service cost information is important for both price takers and
price makers.
Rationale: Both types of companies rely on accurate cost data for profitability and decision-making.
5. Why might one competitor with accurate product cost information be more successful than another
without it?
a) They can undercut competitors’ prices, driving them out of business.
b) They can set profitable prices, identify cost inefficiencies, and improve overall operations.
c) They can pay higher wages to employees.
d) They can set higher prices and earn more profits.
Answer: b) They can set profitable prices, identify cost inefficiencies, and improve overall operations.
Rationale: Accurate cost data enables better pricing strategies, operational efficiency, and profitability.
6. Job order costing is appropriate when which two conditions exist?
a) Products are identical, and processes are the same.
b) Products are distinct, and processes differ for different products.
c) Products are distinct, but processes are the same.
d) Products are identical, but processes differ.
Answer: b) Products are distinct, and processes differ for different products.
Rationale: Job order costing applies to customized products requiring varied processes.
7. Why is having accurate product cost information important?
a) To charge a price based on costs and a reasonable markup.
b) To minimize profits.
c) To estimate costs without considering a markup.
d) To grow faster than competitors.
Answer: a) To charge a price based on costs and a reasonable markup.
Rationale: Accurate cost information ensures products are priced for profitability.
,ESTUDYR
8. Which type of company should use job order costing?
a) Air filter manufacturer
b) Soda bottler
c) Paper towel manufacturer
d) Commercial aircraft manufacturer
Answer: d) Commercial aircraft manufacturer
Rationale: Job order costing is ideal for custom, high-cost products like aircraft.
9. What is a condition to using job order costing?
a) Tracking total direct materials for a given period of time.
b) Having no manufacturing overhead assigned to product costs.
c) Tracking total direct labor costs for a period of time.
d) Identifying each specific job or product manufactured.
Answer: d) Identifying each specific job or product manufactured.
Rationale: Specific job identification is critical in job order costing to track costs accurately.
10. Which costs should be assigned to each product under a job order costing system?
a) Direct materials, direct labor, and manufacturing overhead.
b) Direct labor, manufacturing overhead, and administrative expenses.
c) Direct materials, direct labor, and administrative expenses.
d) Manufacturing overhead, administrative expenses, and depreciation of office buildings.
Answer: a) Direct materials, direct labor, and manufacturing overhead.
Rationale: These are the primary components of product costs in job order costing.
11. Which company should use a job ordering costing system?
a) Manufacturer of custom furniture
b) Manufacturer of paint
c) Food processing plant
d) Loan processing firm
Answer: a) Manufacturer of custom furniture
Rationale: Job order costing is suited for companies producing customized products.
, ESTUDYR
12. The profitability of each separate job or product can only be tracked using which product costing
system?
a) Process costing
b) Average unit costing
c) Profitability costing
d) Job order costing
Answer: d) Job order costing
Rationale: Only job order costing tracks costs and profitability by specific job or product.
13. A company producing mass quantities of identical goods should use which costing system?
a) Job order costing
b) Process costing
c) Activity-based costing
d) Standard costing
Answer: b) Process costing
Rationale: Process costing is suitable for industries producing uniform products in large volumes.
14. What is the primary focus of process costing?
a) Tracking costs by job or batch.
b) Allocating costs to mass-produced units.
c) Identifying non-manufacturing costs.
d) Tracking profitability by service.
Answer: b) Allocating costs to mass-produced units.
Rationale: Process costing averages costs across identical units.
15. What is the primary distinction between job order costing and process costing?
a) Job order costing tracks costs by product orders, while process costing averages costs over large
quantities of similar products.
b) Job order costing focuses on direct materials only, while process costing tracks all costs.
c) Job order costing is only used by service industries, while process costing is used by manufacturers.
d) Job order costing applies to mass production, while process costing applies to custom products.
Answer: a) Job order costing tracks costs by product orders, while process costing averages costs over
large quantities of similar products.
