WGU D101 Cost and Managerial Accounting OBJECTIVE ASSESSMENT ACTUAL EXAM STUDY GUIDE 2025/2026 ACCURATE QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES || 100% GUARANTEED PASS BRAND NEW VERSION

WGU D101 Cost and Managerial Accounting OBJECTIVE ASSESSMENT ACTUAL EXAM STUDY GUIDE 2025/2026 ACCURATE QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES || 100% GUARANTEED PASS BRAND NEW VERSION 1. What is a price taker? - ANSWER A company that has to accept the price that the market sets for a good. They have no influence over setting the price. 2. What is a price maker? - ANSWER a firm possessing the power to set the price within the market. They still need to track all costs in order to make sure they are making an adequate return. 3. What is the major purpose and use of job order costing? a. To create a system that tracks both manufacturing and period costs and assigns both to products b. To create a system in which manufacturing costs are tracked by period instead of by products c. To create a system in which manufacturing costs are accumulated by separate product orders or batches d. To create a system that is exclusively used by price makers and not by price takers - ANSWER c. 4. Which statement is true? a. Having accurate product or service cost information is important for both price takers and price makers. b. Having accurate product or service cost information is important for price takers, but not price makers. c. Having accurate produce or service cost information is not important for either price takers or price makers. d. Having accurate product or service cost information is important for price makers, but not price takers. - ANSWER a. 5. Which of the following are always considered 100% complete when calculating equivalent units? a. Units in ending work-in-process conversion costs. b. Units started during the period. c. Units started and completed during the period. d. Units in work-in-process for material costs. - ANSWER c. Correct! Units started and completed during the period are always considered 100% completed and are 100% completed all the time. You cannot call them completed units if they are not completed during the period. 6. Using a traditional overhead allocation method, what is a common measure of activity? a. Amount spent on research and development b. CEO salary c. Forecasted sales increase d. Direct labor hours - ANSWER d. Correct! With a traditional overhead allocation method, all overhead is allocated based on one common measure of activity, such as direct labor hours. 7. Using an ABC overhead allocation method, overhead is allocated based on several different measures of activity. What are these measures of activity called? a. Total manufacturing costs b. Direct labor c. Direct materials d. Cost drivers - ANSWER d. Correct! Overhead is allocated based on several different measures of activity, which are called cost drivers. 8. The traditional approach to allocating overhead involves assigning all the overhead costs to products according to which approach? a. Multiple measures of activity b. Using a direct approach c. One simple measure of activity d. Using multiple cost drivers - ANSWER c. Correct! The traditional approach to allocating overhead involves assigning all the overhead costs to products according to one simple measure of activity, such as direct labor or machine hours. 9. What is important to consider when determining how to allocate overhead costs to a product or a production process? a. Determining what factors are causing direct labor costs to be incurred b. Determining what factors are causing all manufacturing costs to be incurred c. Determining what factors are causing direct materials costs to be incurred d. Determining what factors are causing overhead costs to be incurred - ANSWER d. Correct! It is important when determining how to allocate overhead costs to a product or production process to consider what factors are causing overhead costs to be incurred in the manufacturing process in the first place. 10. What is a change, or measurable factor, directly related to the amount of overhead cost associated with the production of a specific item? a. A design change b. A change in direct materials used c. A change in the union contract d. A change in direct labor pay rates - ANSWER a. Correct! A design change is a measurable factor directly related to the amount of overhead cost associated with the production of a specific item. 11. Sales Mix - ANSWER The relative proportion of total sales dollars (or total units sold) that is represented by each of a company's products 12. Selling and Administrative Expense Budget - ANSWER A schedule of all nonproduction spending expected to occur during the budget period 13. Service Organizations - ANSWER Any organization whose main economic activity involves producing a nonphysical product that provides value to a customer 14. Special Order - ANSWER An order that may be priced below the normal selling price to utilize excess capacity and thereby contribute to company profits 15. Standard Cost System - ANSWER A cost-accumulation system in which standard costs are used as product costs instead of actual costs. The standard costs are then adjusted to actual costs when financial reports are created. This adjustment creates variances that are reported to management 16. Standard Costing System - ANSWER A cost-accumulation system in which standard costs are used as product costs instead of actual costs. The standard costs are then adjusted to actual costs when financial reports are created. This adjustment creates variances that are reported to management 17. Standard Quantity Allowed - ANSWER Amount of materials that should have been used to manufacture products in a specific time period 18. Stepped Costs - ANSWER Costs that change in total in a stairstep fashion (in large amounts) with changes in volume of activity 19. Sunk Cost - ANSWER Either past costs or unchangeable future costs that do not change as the result of a future decision 20. When determining how many units are necessary to reach a target level net income, you always add fixed costs and target net income (the amount that needs to be covered) and divide the total by the contribution margin (sales price per unit - variable cost per unit). - ANSWER Which formula calculates how many units would be necessary to reach a target level of net income? Fixed costs plus target net income divided by sales price per unit Fixed costs plus target net income divided by contribution margin per unit Fixed costs minus target net income divided by contribution margin per unit Fixed costs minus target net income divided by sales price per unit 21. (Sales Price x units) -(Variable Costs) - Fixed costs - ANSWER Target Income= 22. Sales Revenue-Variable Costs- Fixed Costs - ANSWER Profit= 23. Variable cost/Sales Price - ANSWER Variable Cost Ratio= 24. S-(S-Variable Cost ratio)-Fixed Cost - ANSWER Break even point in Sales Dollar= 25. Total Fixed Costs/(Sales price per unit-Variable Cost per unit) - ANSWER Breakeven in Sales = 26. Revenues-Variable Costs - ANSWER Contribution Margin = 27. Revenues- Variable Costs - Fixed Costs - ANSWER Operating Income = 28. Contribution Margin/Operating Income - ANSWER Degree of Operating Leverage= - ANSWER Sales revenue -Cost of good sold =Gross margin -Selling and administrative expense =Operating income -Interest expense =Net income before tax -Income taxes Net income after tax 29. Which category of overhead includes factory building depreciation, factory insurance, and factory security costs? a. Facility support b. Product line c. Product line d. Unit - ANSWER a. Correct! Factory building depreciation, factory insurance, and factory security are overhead costs that remain the same no matter how much production goes on inside the factory. These overhead costs are classified as the cost of keeping the factory open and are given the general label of "facility support costs." 30. What production-related cost driver is typically used for facility support costs? a. The number of product lines is the cost driver for facility support costs. b. Production-related cost drivers are limited in nature for facility support costs. c. Production-related cost drivers are not used for facility support costs. d. The number of production batches is the cost driver for facility support costs. - ANSWER c. Correct! There is no production related cost driver that matches up with changes in the amount of overhead cost associated with facility support costs. 31. What would activities such as machine setups, consumed power, and purchase orders be considered as when using ABC costing? a. Manufacturing overhead costs b. Cost drivers c. Cost driver rates d. Cost pools - ANSWER b. Correct! Cost drivers are the activities that cause or relate to manufacturing overhead costs be incurred. 32. In which setting is the use of an ABC overhead allocation system appropriate? a. When all products are the same b. When operations involve a variety of different products and processes c. When products are different, but the processes are roughly the same d. When all projects and processes are the same - ANSWER b. Correct! An activity-based ABC overhead allocation system is appropriate when the nature of the production process differs substantially across different products. 33. What is the purpose of using CVP analysis? A. To study the impact of opportunity costs on the ability to outsource production B. To study the difference between budgeted amounts and actual amounts C. To study the interrelationships among revenues, costs, levels of activity, and profits D. To study the interrelationships among direct materials, direct labor, manufacturing overhead, and cost drivers - ANSWER C. Correct! CVP analysis involves studying the interrelationships among revenues, costs, levels of activity, and profits. 34. In a CVP graph, what is represented by the vertical-axis intercept of the total cost line? A. Total variable costs B. Price per unit C. Variable cost per unit D. Total fixed cost - ANSWER D. Correct! In a CVP graph, the vertical axis intercept of the total cost line is the total fixed cost. At this point, there are no variable costs because production is zero