WGU D559 Advanced Managerial Accounting: Practice Test 1
(Units 1-7)
50 questions
1. A cost that can be easily and conveniently traced to a cost object is a:
A. Indirect cost
B. Direct cost
C. Common cost
D. Sunk cost
Correct Answer: B. Direct cost
Rationale: Indirect costs must be allocated.
2. Product costs become expenses on the income statement when:
A. They are incurred
B. The related goods are sold
C. Production begins
D. Cash is paid
Correct Answer: B. The related goods are sold
Rationale: Until sale, they are held in inventory.
3. The primary users of managerial accounting information are:
A. Internal managers
B. External investors
C. Government regulators
D. Creditors only
Correct Answer: A. Internal managers
Rationale: Managerial accounting supports internal planning, control and decisions.
4. A cost that has already been incurred and cannot be changed by any decision is a(n):
A. Opportunity cost
B. Differential cost
C. Sunk cost
D. Variable cost
Correct Answer: C. Sunk cost
Rationale: Sunk costs are irrelevant to future decisions.
5. A manufacturer reports direct materials of $50,000, direct labor of $40,000 and manufacturing
overhead of $35,000. What is conversion cost?
A. $75,000
B. $90,000
C. $125,000
D. $85,000
Correct Answer: A. $75,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
, 6. Beginning finished goods $31,000, cost of goods manufactured $235,000, ending finished
goods $34,000. What is cost of goods sold?
A. $235,000
B. $232,000
C. $300,000
D. $238,000
Correct Answer: B. $232,000
Rationale: COGS = $31,000 + $235,000 - $34,000 = $232,000.
7. Beginning work in process $18,000; direct materials used $150,000; direct labor $80,000;
manufacturing overhead applied $110,000; ending work in process $27,000. What is cost of
goods manufactured?
A. $340,000
B. $385,000
C. $313,000
D. $331,000
Correct Answer: D. $331,000
Rationale: COGM = $18,000 + $150,000 + $80,000 + $110,000 - $27,000 = $331,000.
8. A manufacturer reports direct materials of $80,000, direct labor of $40,000 and manufacturing
overhead of $30,000. What is prime cost?
A. $70,000
B. $120,000
C. $150,000
D. $110,000
Correct Answer: B. $120,000
Rationale: Prime cost = direct materials + direct labor.
9. Beginning finished goods $34,000, cost of goods manufactured $290,000, ending finished
goods $17,000. What is cost of goods sold?
A. $307,000
B. $290,000
C. $341,000
D. $273,000
Correct Answer: A. $307,000
Rationale: COGS = $34,000 + $290,000 - $17,000 = $307,000.
10. Which is an example of a discretionary fixed cost?
A. Advertising
B. Depreciation on a factory building
C. Property taxes
D. Long-term lease payments
Correct Answer: A. Advertising
Rationale: Discretionary costs can be changed in the short term.
11. A cost that stays constant over a wide range of activity but jumps to a new level when
activity passes a threshold is a:
A. True variable cost
B. Sunk cost
C. Step-fixed cost
D. Mixed cost with no fixed part
Correct Answer: C. Step-fixed cost
Rationale: Example: adding a supervisor for a new shift.
(Units 1-7)
50 questions
1. A cost that can be easily and conveniently traced to a cost object is a:
A. Indirect cost
B. Direct cost
C. Common cost
D. Sunk cost
Correct Answer: B. Direct cost
Rationale: Indirect costs must be allocated.
2. Product costs become expenses on the income statement when:
A. They are incurred
B. The related goods are sold
C. Production begins
D. Cash is paid
Correct Answer: B. The related goods are sold
Rationale: Until sale, they are held in inventory.
3. The primary users of managerial accounting information are:
A. Internal managers
B. External investors
C. Government regulators
D. Creditors only
Correct Answer: A. Internal managers
Rationale: Managerial accounting supports internal planning, control and decisions.
4. A cost that has already been incurred and cannot be changed by any decision is a(n):
A. Opportunity cost
B. Differential cost
C. Sunk cost
D. Variable cost
Correct Answer: C. Sunk cost
Rationale: Sunk costs are irrelevant to future decisions.
5. A manufacturer reports direct materials of $50,000, direct labor of $40,000 and manufacturing
overhead of $35,000. What is conversion cost?
A. $75,000
B. $90,000
C. $125,000
D. $85,000
Correct Answer: A. $75,000
Rationale: Conversion cost = direct labor + manufacturing overhead.
, 6. Beginning finished goods $31,000, cost of goods manufactured $235,000, ending finished
goods $34,000. What is cost of goods sold?
A. $235,000
B. $232,000
C. $300,000
D. $238,000
Correct Answer: B. $232,000
Rationale: COGS = $31,000 + $235,000 - $34,000 = $232,000.
7. Beginning work in process $18,000; direct materials used $150,000; direct labor $80,000;
manufacturing overhead applied $110,000; ending work in process $27,000. What is cost of
goods manufactured?
A. $340,000
B. $385,000
C. $313,000
D. $331,000
Correct Answer: D. $331,000
Rationale: COGM = $18,000 + $150,000 + $80,000 + $110,000 - $27,000 = $331,000.
8. A manufacturer reports direct materials of $80,000, direct labor of $40,000 and manufacturing
overhead of $30,000. What is prime cost?
A. $70,000
B. $120,000
C. $150,000
D. $110,000
Correct Answer: B. $120,000
Rationale: Prime cost = direct materials + direct labor.
9. Beginning finished goods $34,000, cost of goods manufactured $290,000, ending finished
goods $17,000. What is cost of goods sold?
A. $307,000
B. $290,000
C. $341,000
D. $273,000
Correct Answer: A. $307,000
Rationale: COGS = $34,000 + $290,000 - $17,000 = $307,000.
10. Which is an example of a discretionary fixed cost?
A. Advertising
B. Depreciation on a factory building
C. Property taxes
D. Long-term lease payments
Correct Answer: A. Advertising
Rationale: Discretionary costs can be changed in the short term.
11. A cost that stays constant over a wide range of activity but jumps to a new level when
activity passes a threshold is a:
A. True variable cost
B. Sunk cost
C. Step-fixed cost
D. Mixed cost with no fixed part
Correct Answer: C. Step-fixed cost
Rationale: Example: adding a supervisor for a new shift.
