d774 wgu intro to business accounting wgu UPDATED ACTUAL Questions and
CORRECT Answers
profit center A responsibility center that incurs costs and also generates revenues.
cost center A responsibility center that incurs costs but does not directly generate revenues
discretionary cost center incurs controllable costs but doesn't generate direct revenue (HR)
, A segment whose manager has control over costs, revenues, and investments in
investment centers
operating assets. (regional HR overseeing capital investments)
examples of discretionary cost center marketing department
cost center control expenses not make revenue (maintenance dept)
discretionary cost center manages controllable costs has indirect link to revenue
(HR, accounting)
revenue center generates sales and revenues (sales team)
5 types of responsibility centers
profit center generates revenue and costs to track profitability (global franchise store
location)
investment center oversees profits and major capital investments (regional division
multinational corporation)
centers that produce revenue and evaluated on based on sales volume not cost
revenue centers
control
A responsibility center that incurs costs and also generates revenues. and manage
profit center
expenses ensuring profits
a system for evaluating the performance of each responsibility center and its
responsibility accounting
manager
Tracking and evaluating financial performance by department or business unit. helps
departmental reporting
evaluate performance, track expenses and make informed decisions
All costs that are involved in acquiring or making a product. In the case of
Product Costs manufactured goods, these costs consist of direct materials, direct labor, and
manufacturing overhead.
direct materials are raw materials used in production (flour, sugar)
3 compmoments of product costs direct labor wages paid to workers directly making product
manufacturing overhead indirect costs required for production (utilities, rent)
costs that are taken directly to the income statement as expenses in the period in
which they are incurred or accrued
Period Costs non manufacturing costs not directly related to production but necessary for
business (office rent, marketing and advertising expenses, CEO and admin salaries,
sales commisions)
anything for which a cost measurement is desired (catering order, a single product
cost object
for sale)
Prime Cost direct materials cost plus direct labor cost total of direct costs in production
Direct Labor + Manufacturing Overhead
Conversion Costs
cost to convert raw materials into finished product
costs that do not vary with production or sales level (rent, insurance, salaried
fixed costs
employee)
variable costs costs that vary directly with the level of production (shipping costs, hourly labor)
costs that have both a fixed and a variable component (electricity Bill's, sales
Mixed Costs
commission)
a cost system that assigns costs to specific production batches or jobs
Job Order Costing
used for tracking customized item or one of a kind products
a cost system that assigns costs to each process, or work center, in the production
Process Costing cycle, and then calculates the average cost for all units produced
for uniform products that pass through standardized production steps
A method of allocating overhead based on each product's use of activities in making
Activity-based costing (ABC)
the product. Based on actual work performed
CORRECT Answers
profit center A responsibility center that incurs costs and also generates revenues.
cost center A responsibility center that incurs costs but does not directly generate revenues
discretionary cost center incurs controllable costs but doesn't generate direct revenue (HR)
, A segment whose manager has control over costs, revenues, and investments in
investment centers
operating assets. (regional HR overseeing capital investments)
examples of discretionary cost center marketing department
cost center control expenses not make revenue (maintenance dept)
discretionary cost center manages controllable costs has indirect link to revenue
(HR, accounting)
revenue center generates sales and revenues (sales team)
5 types of responsibility centers
profit center generates revenue and costs to track profitability (global franchise store
location)
investment center oversees profits and major capital investments (regional division
multinational corporation)
centers that produce revenue and evaluated on based on sales volume not cost
revenue centers
control
A responsibility center that incurs costs and also generates revenues. and manage
profit center
expenses ensuring profits
a system for evaluating the performance of each responsibility center and its
responsibility accounting
manager
Tracking and evaluating financial performance by department or business unit. helps
departmental reporting
evaluate performance, track expenses and make informed decisions
All costs that are involved in acquiring or making a product. In the case of
Product Costs manufactured goods, these costs consist of direct materials, direct labor, and
manufacturing overhead.
direct materials are raw materials used in production (flour, sugar)
3 compmoments of product costs direct labor wages paid to workers directly making product
manufacturing overhead indirect costs required for production (utilities, rent)
costs that are taken directly to the income statement as expenses in the period in
which they are incurred or accrued
Period Costs non manufacturing costs not directly related to production but necessary for
business (office rent, marketing and advertising expenses, CEO and admin salaries,
sales commisions)
anything for which a cost measurement is desired (catering order, a single product
cost object
for sale)
Prime Cost direct materials cost plus direct labor cost total of direct costs in production
Direct Labor + Manufacturing Overhead
Conversion Costs
cost to convert raw materials into finished product
costs that do not vary with production or sales level (rent, insurance, salaried
fixed costs
employee)
variable costs costs that vary directly with the level of production (shipping costs, hourly labor)
costs that have both a fixed and a variable component (electricity Bill's, sales
Mixed Costs
commission)
a cost system that assigns costs to specific production batches or jobs
Job Order Costing
used for tracking customized item or one of a kind products
a cost system that assigns costs to each process, or work center, in the production
Process Costing cycle, and then calculates the average cost for all units produced
for uniform products that pass through standardized production steps
A method of allocating overhead based on each product's use of activities in making
Activity-based costing (ABC)
the product. Based on actual work performed
