WGU D101 COST AND MANAGERIAL ACCOUNTING PRACTICE EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS | ALREADY GRADED A+RECENT VERSION

WGU D101 COST AND MANAGERIAL ACCOUNTING PRACTICE EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS | ALREADY GRADED A+RECENT VERSION 1. Actual Manufacturing Overhead - ANSWER Manufacturing costs other than direct materials and direct labor 2. Applied Manufacturing Overhead - ANSWER The amount of the manufacturing overhead that is assigned to the goods produced; this is usually done by using a predetermined annual overhead rate 3. Batch-level Activities - ANSWER Activities that take place to support a batch or production run, regardless of the size of the batch 4. Beginning Work-in-process Inventory - ANSWER The ending-work-in-process inventory that is carried over from the last accounting period to the current accounting period 5. Break-even Point - ANSWER The amount of sales at which total costs of the number of units sold equal total revenues; the point at which there is no profit or loss 6. Budgeted Production in Units - ANSWER The budgeted number of units to be produced in a period, taking into consideration the sales volume, the number of units in beginning inventory, and the number of units required to be in ending inventory 7. Budgeted Sales in Dollars - ANSWER The result when the budgeted sales in units is multiplied by the unit sales prices for each product budgeted to be sold in the budget for the next year or the next period 8. Budgeted Sales in Units - ANSWER Information in the sales budget that feeds directly into the production budget, from which the direct materials and direct labor budgets are created 9. Common Costs - ANSWER Overhead costs like executive salaries or property taxes that cannot be attributed to and are not the responsibility of specific products, departments, or business segments 10. Contribution Margin - ANSWER The difference between total sales and variable costs; the portion of sales revenue available to cover fixed costs and provide a profit 11. Contribution Margin Ratio - ANSWER The percentage of net sales revenue left after variable costs are deducted; the contribution margin divided by net sales revenue 12. Conversion Costs - ANSWER The costs of converting raw materials to finished products; these include direct labor and manufacturing overhead costs 13. Cost Behavior - ANSWER The way a cost is affected by changes in activity levels 14. Cost Driver - ANSWER Numerical measure used to reflect the amount of a specific cost associated with a particular activity 15. Cost Objects - ANSWER A product or division for which costs are accumulated and tracked 16. Cost Pool - ANSWER Total cost being generated by a specific overhead cost activity 17. Cost of Goods Manufactured - ANSWER Total of all manufacturing costs 18. Cost of Goods Manufactured Schedule - ANSWER A schedule supporting the income statement that summarizes the total cost of goods manufactured and transferred out of the work-in process inventory account during a period; these costs include direct materials, direct labor, and applied manufacturing overhead 19. Cost of Goods Sold - ANSWER Cost of products sold in a company, including costs of materials used to create product and labor costs 20. Cost-volume-profit (CVP) Analysis - ANSWER Techniques for determining how changes in revenues, costs, and level of activity affect the profitability of an organization 21. Critical Resource Factor - ANSWER The resource that limits operating capacity by its availability 22. Differential Cost - ANSWER Future costs that change as a result of a decision; also called incremental or relevant costs 23. Direct Materials Budget - ANSWER A schedule of direct materials to be used during the budget period and direct materials to be purchased during that period 24. Economies of Scale - ANSWER A proportionate saving in costs gained by an increased level of production 25. Ending Work-in-process Inventory - ANSWER Cost of partially completed work at the end of an accounting period 26. Equivalent Units of Production - ANSWER A method used in a process costing system to measure the production output during a period; essentially the "work done" by the center or department in terms of units of output 27. Estimated Manufacturing Overhead - ANSWER Budgeted manufacturing overhead costs that are used to establish the predetermined overhead rate 28. Facility Support Activities - ANSWER Activities necessary to have a facility to participate in the development and production of products or services; activities are not related to any particular line of products or services 29. Finished Goods Inventory - ANSWER Inventory that has completed the production process and is ready for sale to customers 30. Fixed Costs - ANSWER Costs that remain constant in total, regardless of activity level, at least over a certain range of activity 31. Fixed Manufacturing Overhead Expenses - ANSWER Expenses that do not vary with the amount or the level of budgeted or actual production within the relevant range that are needed to produce a product, including factory depreciation or rent 32. Gross Margin - ANSWER The excess of net sales revenue over the cost of goods sold 33. Job Order Costing - ANSWER A method of product costing whereby each job, product, or batch of products is costed seperately 34. Joint Manufacturing Process - ANSWER When one material input is used to produce more than one product 35. Joint Product Costs - ANSWER The costs that a firm incurs before the point at which the different products are separated for further processing or immediate sale 36. Labor Efficiency Variance - ANSWER The extent to which the actual labor used varies from the standard quantity; equal to the difference between the actual quantity of labor used and the standard quantity of labor allowed multiplied by the standard rate 37. Labor Rate Variance - ANSWER The extent to which the standard labor rate varies from the actual rate for the quantity of labor used; equal to the difference between the standard rate and the actual rate multiplied by the quantity of labor used 38. Management By Exception - ANSWER The strategy of focusing attention on significant deviations from standard costs or expectations 39. Manufacturing Organizations - ANSWER Any organization whose main economic activity involves using components or raw materials to make finished goods for sale to customers 40. Manufacturing Overhead Budget - ANSWER A schedule of production costs other than those for direct labor and direct materials 41. Manufacturing Overhead Rate - ANSWER The rate at which manufacturing overhead costs are assigned to products; equals estimated manufacturing overhead costs for the period divided by the number of units of the activity base being used 42. Master Budget - ANSWER A network of many separate schedules and budgets that together constitute the overall operating and financing plan for the coming operating period. 43. Materials Price Variance - ANSWER The extent to which the standard price varies from the actual price for the quantity of materials purchased or used; equal to the difference between the standard and actual prices multiplied by the quantity purchased or used 44. 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. 45. 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. 46. 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. 47. 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. 48. Two competitors exist in the same industry. The first company has accurate product cost information while the second company does not. What is the reason behind why the first company is more successful than the second? a. With accurate job cost information, the first company can undercut the second company's prices, thus driving the second company out of business. b. With accurate job cost information, the first company can set prices that guarantee making a profit, can understand which costs need to be worked on, and can determine which actions can be taken to make the company more efficient and profitable. c. With accurate job cost information, the first company can pay higher wages to employees, thus motivating them more than the employees of the second company. d. With accurate job cost information, the first company can set prices higher than the second company, thus earning higher profits. - ANSWER b. 49. Job order costing is appropriate when which two conditions exist? a. Products produced are all the same, and the manufacturing processes used to produce them are the same. b. Products produced are distinct from each other, and the manufacturing processes used are different for different products. c. Products produced are distinct, but the manufacturing processes used are the same for different products. d. Products produced are all the same, but the manufacturing processes used to produce them are different for different products. - ANSWER b. 50. Why is having accurate product cost information important? a. So manufacturers can charge a price based on costs and a reasonable markup b. So companies can minimize the profits they are earning c. So manufacturers can charge a price based on estimated product costs, not including a reasonable markup d. So companies can grow faster than all competitors in their industry - ANSWER a. 51. 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. 52. 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 the product cost c. Tracking total direct labor costs for a period of time d. Identifying each specific job or product manufactured - ANSWER d. 53. 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. 54. 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. 55. 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. 56. In completing its job order costing journal entries, ABC Company's accountants made a credit entry to finished goods inventory. When is this entry made? a. When work-in-process inventory is transferred to finished goods inventory b. When finished goods inventory is sold c. When the cost of goods manufactured is being calculated d. When manufacturing overhead costs are applied to products being made - ANSWER b. 57. Which account are the costs of the raw materials, direct labor, and miscellaneous manufacturing overhead transferred to when the product is being manufactured? a. Finished goods inventory b. Cost of goods sold c. Work-in-process inventory d. Direct materials - ANSWER c. 58. When manufacturing is completed on specific products, their costs are transferred to which account? a. Cost of goods sold b. Work-in-process inventory c. Finished goods inventory d. Direct materials - ANSWER c. 59. The cost of which items should be included as a manufacturing overhead cost? a. The wages of employees who work on production lines b. The raw materials used in the finishing department c. The direct materials used to make a product d. The wages of factory custodians - ANSWER d.