026
D196 WGU Leadership and Management
in Nursing Comprehensive Exam Review
2025
Can you identify indirect materials and indirect labor and how they are handled in a
manufacturing business?
A. Direct labor and materials used on every product
B. Labor and materials that support production but don’t directly touch the product
C. Expenses that only occur in marketing
D. Sales and administrative costs
Rationale:
The correct answer is B because indirect labor (like supervisors, janitors, and security) and
indirect materials (like sandpaper or brushes) support production but aren’t part of the final
product. The other options describe unrelated or direct costs.
Can you describe the flow of product costs for a manufacturing, a merchandising, and a service
business?
A. Manufacturing: Work in process → Finished goods → Cost of goods sold
B. Service: Finished goods → Inventory → Cost of sales
C. Merchandising: Production → Marketing → Delivery
D. Service: Materials → Wages → Product sale
Rationale:
The correct answer is A because manufacturing involves multiple inventory stages before goods
are sold. Merchandising skips production, and service firms generally have no inventory.
Can you explain what a fixed cost is and why it’s important to C-V-P analysis?
A. A cost that changes with activity levels
B. A cost that is unpredictable each month
C. A cost that remains constant in total regardless of activity level
D. A cost directly tied to labor hours
Rationale:
The correct answer is C because fixed costs (like rent and insurance) remain unchanged with
output volume, which helps determine the break-even point in CVP analysis.
,026
Can you explain what a variable cost is and why it’s important to C-V-P analysis?
A. A cost that changes in total proportion to activity but is constant per unit
B. A cost that is always fixed
C. A cost not related to production
D. A cost only found in service industries
Rationale:
The correct answer is A because variable costs (like materials and labor) rise or fall with activity,
which directly affects profitability and break-even calculations.
What are stepped fixed costs?
A. A variable cost that changes with every unit
B. A fixed cost that changes daily
C. A fixed cost that stays constant within a range but jumps at certain activity levels
D. A direct material cost
Rationale:
The correct answer is C because stepped fixed costs remain steady until a certain production
threshold is reached, then increase in steps.
What are mixed costs?
A. Costs that are only variable
B. Costs that contain both variable and fixed elements
C. Costs that don’t involve money
D. Direct materials
Rationale:
The correct answer is B because mixed costs (like utilities) have both fixed base charges and
variable usage charges.
Can you explain and determine the estimated overhead?
A. The amount of direct materials used
B. The overhead costs budgeted for a future period
C. The actual overhead incurred
D. The variable cost per unit
, 026
Rationale:
The correct answer is B because estimated overhead predicts future indirect costs based on
expected activity. The others describe real or direct costs.
Can you explain and determine the actual overhead?
A. All manufacturing costs other than direct labor and direct materials
B. The total direct labor used
C. The total fixed expenses
D. The cost of materials in storage
Rationale:
The correct answer is A because actual overhead represents real indirect manufacturing expenses
incurred during production.
Can you explain and determine applied overhead?
A. Overhead assigned to goods produced using the predetermined overhead rate
B. Direct costs added to materials
C. Budgeted rent expenses
D. Depreciation of sales equipment
Rationale:
The correct answer is A because applied overhead uses the predetermined rate multiplied by
actual activity to allocate costs to production.
What is overapplied and underapplied overhead?
A. Overapplied means less cost applied than actual
B. Overapplied means applied > actual; underapplied means actual > applied
C. Both mean the same thing
D. Overapplied means costs were ignored
Rationale:
The correct answer is B because when applied overhead exceeds actual, it’s overapplied; the
reverse is underapplied.
What is the C-V-P equation?
A. Fixed Costs + Variable Costs = Profit
B. Sales Revenue - Variable Costs - Fixed Costs = Profit
D196 WGU Leadership and Management
in Nursing Comprehensive Exam Review
2025
Can you identify indirect materials and indirect labor and how they are handled in a
manufacturing business?
A. Direct labor and materials used on every product
B. Labor and materials that support production but don’t directly touch the product
C. Expenses that only occur in marketing
D. Sales and administrative costs
Rationale:
The correct answer is B because indirect labor (like supervisors, janitors, and security) and
indirect materials (like sandpaper or brushes) support production but aren’t part of the final
product. The other options describe unrelated or direct costs.
Can you describe the flow of product costs for a manufacturing, a merchandising, and a service
business?
A. Manufacturing: Work in process → Finished goods → Cost of goods sold
B. Service: Finished goods → Inventory → Cost of sales
C. Merchandising: Production → Marketing → Delivery
D. Service: Materials → Wages → Product sale
Rationale:
The correct answer is A because manufacturing involves multiple inventory stages before goods
are sold. Merchandising skips production, and service firms generally have no inventory.
Can you explain what a fixed cost is and why it’s important to C-V-P analysis?
A. A cost that changes with activity levels
B. A cost that is unpredictable each month
C. A cost that remains constant in total regardless of activity level
D. A cost directly tied to labor hours
Rationale:
The correct answer is C because fixed costs (like rent and insurance) remain unchanged with
output volume, which helps determine the break-even point in CVP analysis.
,026
Can you explain what a variable cost is and why it’s important to C-V-P analysis?
A. A cost that changes in total proportion to activity but is constant per unit
B. A cost that is always fixed
C. A cost not related to production
D. A cost only found in service industries
Rationale:
The correct answer is A because variable costs (like materials and labor) rise or fall with activity,
which directly affects profitability and break-even calculations.
What are stepped fixed costs?
A. A variable cost that changes with every unit
B. A fixed cost that changes daily
C. A fixed cost that stays constant within a range but jumps at certain activity levels
D. A direct material cost
Rationale:
The correct answer is C because stepped fixed costs remain steady until a certain production
threshold is reached, then increase in steps.
What are mixed costs?
A. Costs that are only variable
B. Costs that contain both variable and fixed elements
C. Costs that don’t involve money
D. Direct materials
Rationale:
The correct answer is B because mixed costs (like utilities) have both fixed base charges and
variable usage charges.
Can you explain and determine the estimated overhead?
A. The amount of direct materials used
B. The overhead costs budgeted for a future period
C. The actual overhead incurred
D. The variable cost per unit
, 026
Rationale:
The correct answer is B because estimated overhead predicts future indirect costs based on
expected activity. The others describe real or direct costs.
Can you explain and determine the actual overhead?
A. All manufacturing costs other than direct labor and direct materials
B. The total direct labor used
C. The total fixed expenses
D. The cost of materials in storage
Rationale:
The correct answer is A because actual overhead represents real indirect manufacturing expenses
incurred during production.
Can you explain and determine applied overhead?
A. Overhead assigned to goods produced using the predetermined overhead rate
B. Direct costs added to materials
C. Budgeted rent expenses
D. Depreciation of sales equipment
Rationale:
The correct answer is A because applied overhead uses the predetermined rate multiplied by
actual activity to allocate costs to production.
What is overapplied and underapplied overhead?
A. Overapplied means less cost applied than actual
B. Overapplied means applied > actual; underapplied means actual > applied
C. Both mean the same thing
D. Overapplied means costs were ignored
Rationale:
The correct answer is B because when applied overhead exceeds actual, it’s overapplied; the
reverse is underapplied.
What is the C-V-P equation?
A. Fixed Costs + Variable Costs = Profit
B. Sales Revenue - Variable Costs - Fixed Costs = Profit
