WGU D559 Advanced Managerial Accounting: Midterm Exam
(Units 1-7)
50 questions
1. A cost that differs between two alternatives is a:
A. Sunk cost
B. Committed cost
C. Differential cost
D. Common cost
Correct Answer: C. Differential cost
Rationale: Also called incremental cost.
2. Raw materials, work in process and finished goods are inventories found mainly in a:
A. Manufacturing company
B. Service company
C. Merchandising company
D. Nonprofit agency
Correct Answer: A. Manufacturing company
Rationale: Manufacturers hold three types of inventory.
3. As activity increases within the relevant range, variable cost per unit:
A. Increases
B. Remains constant
C. Decreases
D. Becomes zero
Correct Answer: B. Remains constant
Rationale: Total variable cost changes; per-unit cost does not.
4. Indirect materials such as glue and screws are classified as:
A. Manufacturing overhead
B. Direct materials
C. Period costs
D. Selling expenses
Correct Answer: A. Manufacturing overhead
Rationale: They are hard to trace to individual units.
5. A manufacturer reports direct materials of $90,000, direct labor of $50,000 and manufacturing
overhead of $80,000. What is prime cost?
A. $130,000
B. $220,000
C. $170,000
D. $140,000
Correct Answer: D. $140,000
Rationale: Prime cost = direct materials + direct labor.
, 6. Beginning finished goods $50,000, cost of goods manufactured $440,000, ending finished
goods $24,000. What is cost of goods sold?
A. $466,000
B. $440,000
C. $514,000
D. $414,000
Correct Answer: A. $466,000
Rationale: COGS = $50,000 + $440,000 - $24,000 = $466,000.
7. Beginning work in process $30,000; direct materials used $140,000; direct labor $100,000;
manufacturing overhead applied $85,000; ending work in process $11,000. What is cost of goods
manufactured?
A. $325,000
B. $366,000
C. $314,000
D. $344,000
Correct Answer: D. $344,000
Rationale: COGM = $30,000 + $140,000 + $100,000 + $85,000 - $11,000 = $344,000.
8. A manufacturer reports direct materials of $40,000, direct labor of $20,000 and manufacturing
overhead of $70,000. What is conversion cost?
A. $60,000
B. $130,000
C. $110,000
D. $90,000
Correct Answer: D. $90,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
9. Beginning finished goods $30,000, cost of goods manufactured $415,000, ending finished
goods $29,000. What is cost of goods sold?
A. $415,000
B. $416,000
C. $474,000
D. $414,000
Correct Answer: B. $416,000
Rationale: COGS = $30,000 + $415,000 - $29,000 = $416,000.
10. A major weakness of the high-low method is that it:
A. Requires complex software
B. Ignores fixed costs
C. Uses only two data points, which may be unrepresentative
D. Uses too many data points
Correct Answer: C. Uses only two data points, which may be unrepresentative
Rationale: Outliers can distort estimates.
11. A utility bill with a monthly base charge plus a charge per kilowatt-hour is a:
A. Pure fixed cost
B. Pure variable cost
C. Mixed cost
D. Sunk cost
Correct Answer: C. Mixed cost
Rationale: It has fixed and variable components.
(Units 1-7)
50 questions
1. A cost that differs between two alternatives is a:
A. Sunk cost
B. Committed cost
C. Differential cost
D. Common cost
Correct Answer: C. Differential cost
Rationale: Also called incremental cost.
2. Raw materials, work in process and finished goods are inventories found mainly in a:
A. Manufacturing company
B. Service company
C. Merchandising company
D. Nonprofit agency
Correct Answer: A. Manufacturing company
Rationale: Manufacturers hold three types of inventory.
3. As activity increases within the relevant range, variable cost per unit:
A. Increases
B. Remains constant
C. Decreases
D. Becomes zero
Correct Answer: B. Remains constant
Rationale: Total variable cost changes; per-unit cost does not.
4. Indirect materials such as glue and screws are classified as:
A. Manufacturing overhead
B. Direct materials
C. Period costs
D. Selling expenses
Correct Answer: A. Manufacturing overhead
Rationale: They are hard to trace to individual units.
5. A manufacturer reports direct materials of $90,000, direct labor of $50,000 and manufacturing
overhead of $80,000. What is prime cost?
A. $130,000
B. $220,000
C. $170,000
D. $140,000
Correct Answer: D. $140,000
Rationale: Prime cost = direct materials + direct labor.
, 6. Beginning finished goods $50,000, cost of goods manufactured $440,000, ending finished
goods $24,000. What is cost of goods sold?
A. $466,000
B. $440,000
C. $514,000
D. $414,000
Correct Answer: A. $466,000
Rationale: COGS = $50,000 + $440,000 - $24,000 = $466,000.
7. Beginning work in process $30,000; direct materials used $140,000; direct labor $100,000;
manufacturing overhead applied $85,000; ending work in process $11,000. What is cost of goods
manufactured?
A. $325,000
B. $366,000
C. $314,000
D. $344,000
Correct Answer: D. $344,000
Rationale: COGM = $30,000 + $140,000 + $100,000 + $85,000 - $11,000 = $344,000.
8. A manufacturer reports direct materials of $40,000, direct labor of $20,000 and manufacturing
overhead of $70,000. What is conversion cost?
A. $60,000
B. $130,000
C. $110,000
D. $90,000
Correct Answer: D. $90,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
9. Beginning finished goods $30,000, cost of goods manufactured $415,000, ending finished
goods $29,000. What is cost of goods sold?
A. $415,000
B. $416,000
C. $474,000
D. $414,000
Correct Answer: B. $416,000
Rationale: COGS = $30,000 + $415,000 - $29,000 = $416,000.
10. A major weakness of the high-low method is that it:
A. Requires complex software
B. Ignores fixed costs
C. Uses only two data points, which may be unrepresentative
D. Uses too many data points
Correct Answer: C. Uses only two data points, which may be unrepresentative
Rationale: Outliers can distort estimates.
11. A utility bill with a monthly base charge plus a charge per kilowatt-hour is a:
A. Pure fixed cost
B. Pure variable cost
C. Mixed cost
D. Sunk cost
Correct Answer: C. Mixed cost
Rationale: It has fixed and variable components.
