WGU C213 Accounting for Decision Makers
Exam Questions and Answers Latest (2025 /
2026) – Verified Answers
Question 1: The contribution margin equals:
A. Sales revenue – fixed expenses
B. Sales revenue – variable expenses
C. Sales revenue – operating expenses
D. Sales revenue – cost of goods sold
Correct Answer: B
Rationale: Contribution margin is defined as sales revenue minus all variable expenses; it shows
how much revenue is available to cover fixed costs and generate profit.
Question 2: A company’s predetermined overhead rate is $25 per machine-hour. Job 410 used
380 machine-hours and actual overhead was $9,200. The overhead applied to Job 410 is:
A. $9,200
B. $9,500
C. $8,800
D. $380
Correct Answer: B
Rationale: Applied overhead = 380 machine-hours × $25 = $9,500.
Question 3: Which costing method is required for external financial reporting under U.S. GAAP?
A. Variable costing
B. Absorption costing
C. Activity-based costing
D. Throughput costing
Correct Answer: B
Rationale: GAAP requires absorption costing so that fixed manufacturing overhead is included in
inventory.
Question 4: A retailer’s breakeven point in units will decrease if:
A. Fixed expenses increase
B. Variable cost per unit decreases
C. Selling price per unit decreases
D. Variable cost per unit increases
,Correct Answer: B
Rationale: Lower variable cost per unit raises unit contribution margin, reducing the units needed
to cover fixed costs.
Question 5: The margin of safety in dollars is calculated as:
A. Budgeted sales – breakeven sales
B. Fixed expenses ÷ contribution margin ratio
C. Actual units – breakeven units
D. Contribution margin – fixed expenses
Correct Answer: A
Rationale: Margin of safety measures how much sales can drop before reaching the breakeven
point.
Question 6: A static budget is most useful when:
A. Actual activity differs greatly from budgeted activity
B. Managers need flexible targets
C. The company wants to isolate sales-volume variances
D. The company desires to keep budgeted costs constant regardless of actual output
Correct Answer: D
Rationale: A static budget keeps cost expectations unchanged at the original planned activity
level.
Question 7: Which variance is most controllable by a purchasing manager?
A. Direct labor efficiency variance
B. Variable overhead efficiency variance
C. Direct materials price variance
D. Fixed overhead volume variance
Correct Answer: C
Rationale: The purchasing manager negotiates prices for raw materials, directly influencing the
direct materials price variance.
Question 8: A company uses a job-order costing system. The journal entry to record the purchase
of $40,000 raw materials on account is:
A. DR Raw Materials $40,000; CR Accounts Payable $40,000
B. DR Work in Process $40,000; CR Raw Materials $40,000
C. DR Manufacturing Overhead $40,000; CR Accounts Payable $40,000
D. DR Cost of Goods Sold $40,000; CR Accounts Payable $40,000
, Correct Answer: A
Rationale: Purchases of raw materials increase the Raw Materials inventory asset and create an
accounts payable liability.
Question 9: Under variable costing, fixed manufacturing overhead is treated as:
A. A product cost
B. A period cost
C. Part of cost of goods sold
D. A direct labor cost
Correct Answer: B
Rationale: Variable costing expenses fixed manufacturing overhead in the period incurred rather
than capitalizing it into inventory.
Question 10: A company’s return on investment (ROI) is 15% and its residual income is $60,000.
If the minimum required rate is 10%, the division’s operating assets must be:
A. $400,000
B. $600,000
C. $1,200,000
D. $6,000
Correct Answer: C
Rationale: Residual income = Operating income – (10% × Assets). Operating income = 15% ×
Assets. Therefore 0.15A – 0.10A = 0.05A = $60,000 → A = $1,200,000.
Question 11: Which balanced-scorecard perspective focuses on employee training hours and
retention?
A. Financial
B. Customer
C. Internal business process
D. Learning & growth
Correct Answer: D
Rationale: Learning & growth perspective examines capabilities that support continuous
improvement such as employee skills.
Question 12: A special-order decision should accept the order when:
A. Incremental revenue exceeds incremental costs
B. Full unit cost exceeds the offered price
C. Fixed costs are unavoidable
D. The order exceeds normal capacity
Exam Questions and Answers Latest (2025 /
2026) – Verified Answers
Question 1: The contribution margin equals:
A. Sales revenue – fixed expenses
B. Sales revenue – variable expenses
C. Sales revenue – operating expenses
D. Sales revenue – cost of goods sold
Correct Answer: B
Rationale: Contribution margin is defined as sales revenue minus all variable expenses; it shows
how much revenue is available to cover fixed costs and generate profit.
Question 2: A company’s predetermined overhead rate is $25 per machine-hour. Job 410 used
380 machine-hours and actual overhead was $9,200. The overhead applied to Job 410 is:
A. $9,200
B. $9,500
C. $8,800
D. $380
Correct Answer: B
Rationale: Applied overhead = 380 machine-hours × $25 = $9,500.
Question 3: Which costing method is required for external financial reporting under U.S. GAAP?
A. Variable costing
B. Absorption costing
C. Activity-based costing
D. Throughput costing
Correct Answer: B
Rationale: GAAP requires absorption costing so that fixed manufacturing overhead is included in
inventory.
Question 4: A retailer’s breakeven point in units will decrease if:
A. Fixed expenses increase
B. Variable cost per unit decreases
C. Selling price per unit decreases
D. Variable cost per unit increases
,Correct Answer: B
Rationale: Lower variable cost per unit raises unit contribution margin, reducing the units needed
to cover fixed costs.
Question 5: The margin of safety in dollars is calculated as:
A. Budgeted sales – breakeven sales
B. Fixed expenses ÷ contribution margin ratio
C. Actual units – breakeven units
D. Contribution margin – fixed expenses
Correct Answer: A
Rationale: Margin of safety measures how much sales can drop before reaching the breakeven
point.
Question 6: A static budget is most useful when:
A. Actual activity differs greatly from budgeted activity
B. Managers need flexible targets
C. The company wants to isolate sales-volume variances
D. The company desires to keep budgeted costs constant regardless of actual output
Correct Answer: D
Rationale: A static budget keeps cost expectations unchanged at the original planned activity
level.
Question 7: Which variance is most controllable by a purchasing manager?
A. Direct labor efficiency variance
B. Variable overhead efficiency variance
C. Direct materials price variance
D. Fixed overhead volume variance
Correct Answer: C
Rationale: The purchasing manager negotiates prices for raw materials, directly influencing the
direct materials price variance.
Question 8: A company uses a job-order costing system. The journal entry to record the purchase
of $40,000 raw materials on account is:
A. DR Raw Materials $40,000; CR Accounts Payable $40,000
B. DR Work in Process $40,000; CR Raw Materials $40,000
C. DR Manufacturing Overhead $40,000; CR Accounts Payable $40,000
D. DR Cost of Goods Sold $40,000; CR Accounts Payable $40,000
, Correct Answer: A
Rationale: Purchases of raw materials increase the Raw Materials inventory asset and create an
accounts payable liability.
Question 9: Under variable costing, fixed manufacturing overhead is treated as:
A. A product cost
B. A period cost
C. Part of cost of goods sold
D. A direct labor cost
Correct Answer: B
Rationale: Variable costing expenses fixed manufacturing overhead in the period incurred rather
than capitalizing it into inventory.
Question 10: A company’s return on investment (ROI) is 15% and its residual income is $60,000.
If the minimum required rate is 10%, the division’s operating assets must be:
A. $400,000
B. $600,000
C. $1,200,000
D. $6,000
Correct Answer: C
Rationale: Residual income = Operating income – (10% × Assets). Operating income = 15% ×
Assets. Therefore 0.15A – 0.10A = 0.05A = $60,000 → A = $1,200,000.
Question 11: Which balanced-scorecard perspective focuses on employee training hours and
retention?
A. Financial
B. Customer
C. Internal business process
D. Learning & growth
Correct Answer: D
Rationale: Learning & growth perspective examines capabilities that support continuous
improvement such as employee skills.
Question 12: A special-order decision should accept the order when:
A. Incremental revenue exceeds incremental costs
B. Full unit cost exceeds the offered price
C. Fixed costs are unavoidable
D. The order exceeds normal capacity
