WGU D101 Cost and Managerial Accounting Exam Prep 2026
| 200 Practice Questions & Detailed Answers | OA Objective
Assessment | Complete A+ Guide
Question 1
What is a price taker in the context of cost and managerial accounting?
A) A firm that has the ability to set its own prices due to market power
B) A company that has to accept the price that the market sets for a good
C) A firm that only sells products at a loss
D) A company that operates in a monopolistic market
Correct Answer: B
Explanation: A price taker is a company that has no influence over setting the price and must accept the
market price as given. These firms operate in highly competitive markets where prices are determined
by supply and demand.
Question 2
What is a price maker?
A) A firm that must accept the market price as given
B) A company that only sells products at a loss
C) A firm possessing the power to set the price within the market
D) A company that operates in a perfectly competitive market
Correct Answer: C
,Explanation: A price maker is a firm that has the ability to set its own prices due to market power. These
firms still need to track all costs to ensure they are making an adequate return.
Question 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
Correct Answer: C
Explanation: Job order costing accumulates manufacturing costs by separate product orders or batches.
It is used when products are distinct from each other and manufacturing processes differ.
Question 4
Which statement is true regarding accurate product or service cost information?
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 product 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
Correct Answer: A
Explanation: Accurate cost information is essential for both price takers and price makers. Price takers
need it to ensure profitability at market prices, while price makers need it to set appropriate prices.
Question 5
Two competitors exist in the same industry. The first company has accurate product cost information
while the second company does not. Why is the first company more successful?
A) With accurate job cost information, the first company can undercut the second company's prices
B) With accurate job cost information, the first company can set prices that guarantee making a profit,
understand which costs need to be worked on, and determine actions to make the company more
efficient and profitable
C) With accurate job cost information, the first company can pay higher wages to employees
D) With accurate job cost information, the first company can set prices higher than the second company
Correct Answer: B
Explanation: Accurate job cost information allows a company to set profitable prices, identify cost
reduction opportunities, and improve efficiency.
Question 6
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
Correct Answer: B
Explanation: Job order costing is appropriate when products are distinct and manufacturing processes
differ. This allows costs to be traced to specific jobs.
Question 7
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
Correct Answer: A
Explanation: Accurate product cost information allows manufacturers to set prices based on actual costs
plus a reasonable markup.
| 200 Practice Questions & Detailed Answers | OA Objective
Assessment | Complete A+ Guide
Question 1
What is a price taker in the context of cost and managerial accounting?
A) A firm that has the ability to set its own prices due to market power
B) A company that has to accept the price that the market sets for a good
C) A firm that only sells products at a loss
D) A company that operates in a monopolistic market
Correct Answer: B
Explanation: A price taker is a company that has no influence over setting the price and must accept the
market price as given. These firms operate in highly competitive markets where prices are determined
by supply and demand.
Question 2
What is a price maker?
A) A firm that must accept the market price as given
B) A company that only sells products at a loss
C) A firm possessing the power to set the price within the market
D) A company that operates in a perfectly competitive market
Correct Answer: C
,Explanation: A price maker is a firm that has the ability to set its own prices due to market power. These
firms still need to track all costs to ensure they are making an adequate return.
Question 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
Correct Answer: C
Explanation: Job order costing accumulates manufacturing costs by separate product orders or batches.
It is used when products are distinct from each other and manufacturing processes differ.
Question 4
Which statement is true regarding accurate product or service cost information?
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 product 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
Correct Answer: A
Explanation: Accurate cost information is essential for both price takers and price makers. Price takers
need it to ensure profitability at market prices, while price makers need it to set appropriate prices.
Question 5
Two competitors exist in the same industry. The first company has accurate product cost information
while the second company does not. Why is the first company more successful?
A) With accurate job cost information, the first company can undercut the second company's prices
B) With accurate job cost information, the first company can set prices that guarantee making a profit,
understand which costs need to be worked on, and determine actions to make the company more
efficient and profitable
C) With accurate job cost information, the first company can pay higher wages to employees
D) With accurate job cost information, the first company can set prices higher than the second company
Correct Answer: B
Explanation: Accurate job cost information allows a company to set profitable prices, identify cost
reduction opportunities, and improve efficiency.
Question 6
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
Correct Answer: B
Explanation: Job order costing is appropriate when products are distinct and manufacturing processes
differ. This allows costs to be traced to specific jobs.
Question 7
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
Correct Answer: A
Explanation: Accurate product cost information allows manufacturers to set prices based on actual costs
plus a reasonable markup.
