2025 WGU C213 FINAL EXAM / C 213 ACTUAL TEST
QUESTIONS WITH DETAILED CORRECT ANSWERS
GRADED A+|||LATEST VERSION
Compare and Contrast Traditional Costing to Activity-Based
Costing (ABC).
ABC is a more accurate product costing system than traditional
product costing systems.
ABC requires more time and expense to administer than do traditional
costing systems.
Companies with diverse products involving substantially different
production processes, an ABC system yields better cost data and
better management decisions.
Describe how basic cost behavior patterns change as sales
volumes change.
Fixed costs (FC) are fixed in total, but as sales volume increases, the
per unit FC decreases.
Variable costs (VC) are fixed per unit, but as sales volume increases,
total VC increases.
Stewart Manufacturing produces and sells die cast race cars. VC for
each die cast car is $3 and total FC are $300,000
Per Unit Variable costs remains the same
Total Fixed Costs remains the same
Per Unit Fixed Costs decrease
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
Operating Activities:
All categories that are on the income statement, and all current assets
and liabilities. i.e. sales (cash received from customers); cost of goods
sold (cash paid for inventory); operating expenses (cash paid for rent);
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
pg. 1
,Investing Activities:
Balance sheet accounts: Long-term assets. i.e. property, plant, and
equipment; investments i.e. cash paid for equipment, cash paid for
investments (stock, loans)
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
Financing Activities:
Balance sheet accounts i.e. Long-term liabilities and equity accounts
i.e. mortgage payable; common stock and additional-paid-in capital
(cash received from stockholders); retained earnings (cash paid for
dividends)
Explain Accrual Accounting
Revenue recognition:
In order for revenue to be recognized in an accrual system, two
criterial must be met:
The promised work must be done before the revenue is recognized.
Cash collection must be reasonable assured before revenue is
recognized.
Explain Accrual Accounting
Expense recognition:
Expenses are matched to the revenue that is generated from the
expense.
Direct matching, as with cost of goods sold (COGS)
However, some expenses are extremely difficult to match with
specific revenue, and are more aligned to a specific time period.
Systematic allocation, as with deprecation
Moreover, some expenses are difficult to match with specific revenue
or specific time periods.
pg. 2
, Immediate recognition, as with advertising
Variable Costs:
A cost that changes directly with changes in the level of sales or
production.
Examples are direct materials costs and sales commission.
Fixed Costs:
A cost that doesn't change based on changes in the level of sales or
production. Examples are building rent and executive salaries.
Product Costs:
A cost incurred as part of the production process.
These costs are first reported as an asset (inventory) and then as an
expense (cost of goods sold) when the product is sold.
Period Costs:
A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are
incurred.
Direct Materials:
The cost of the primary raw materials used in production. In
producing French fries, the direct materials cost is the cost of the
potatoes.
Indirect Materials:
Materials that are necessary to a manufacturing or service business
but are not directly included in or are not a significant part of the
actual product.
Direct Labor:
The cost of the wages of the workers who are assembling the direct
materials into the finished product. In producing an automobile, the
direct labor cost is the compensation cost of the auto workers on the
assembly line.
pg. 3
QUESTIONS WITH DETAILED CORRECT ANSWERS
GRADED A+|||LATEST VERSION
Compare and Contrast Traditional Costing to Activity-Based
Costing (ABC).
ABC is a more accurate product costing system than traditional
product costing systems.
ABC requires more time and expense to administer than do traditional
costing systems.
Companies with diverse products involving substantially different
production processes, an ABC system yields better cost data and
better management decisions.
Describe how basic cost behavior patterns change as sales
volumes change.
Fixed costs (FC) are fixed in total, but as sales volume increases, the
per unit FC decreases.
Variable costs (VC) are fixed per unit, but as sales volume increases,
total VC increases.
Stewart Manufacturing produces and sells die cast race cars. VC for
each die cast car is $3 and total FC are $300,000
Per Unit Variable costs remains the same
Total Fixed Costs remains the same
Per Unit Fixed Costs decrease
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
Operating Activities:
All categories that are on the income statement, and all current assets
and liabilities. i.e. sales (cash received from customers); cost of goods
sold (cash paid for inventory); operating expenses (cash paid for rent);
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
pg. 1
,Investing Activities:
Balance sheet accounts: Long-term assets. i.e. property, plant, and
equipment; investments i.e. cash paid for equipment, cash paid for
investments (stock, loans)
Analyze a statement of cash flows to identify operating, investing,
and financing activities.
Financing Activities:
Balance sheet accounts i.e. Long-term liabilities and equity accounts
i.e. mortgage payable; common stock and additional-paid-in capital
(cash received from stockholders); retained earnings (cash paid for
dividends)
Explain Accrual Accounting
Revenue recognition:
In order for revenue to be recognized in an accrual system, two
criterial must be met:
The promised work must be done before the revenue is recognized.
Cash collection must be reasonable assured before revenue is
recognized.
Explain Accrual Accounting
Expense recognition:
Expenses are matched to the revenue that is generated from the
expense.
Direct matching, as with cost of goods sold (COGS)
However, some expenses are extremely difficult to match with
specific revenue, and are more aligned to a specific time period.
Systematic allocation, as with deprecation
Moreover, some expenses are difficult to match with specific revenue
or specific time periods.
pg. 2
, Immediate recognition, as with advertising
Variable Costs:
A cost that changes directly with changes in the level of sales or
production.
Examples are direct materials costs and sales commission.
Fixed Costs:
A cost that doesn't change based on changes in the level of sales or
production. Examples are building rent and executive salaries.
Product Costs:
A cost incurred as part of the production process.
These costs are first reported as an asset (inventory) and then as an
expense (cost of goods sold) when the product is sold.
Period Costs:
A cost incurred outside the factory or production facility.
These costs are reported as an expense in the period in which they are
incurred.
Direct Materials:
The cost of the primary raw materials used in production. In
producing French fries, the direct materials cost is the cost of the
potatoes.
Indirect Materials:
Materials that are necessary to a manufacturing or service business
but are not directly included in or are not a significant part of the
actual product.
Direct Labor:
The cost of the wages of the workers who are assembling the direct
materials into the finished product. In producing an automobile, the
direct labor cost is the compensation cost of the auto workers on the
assembly line.
pg. 3
