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WGU D101 Cost and Managerial Accounting
ACTUAL EXAM QUESTIONS AND ANSWERS
2026/2027 | Objective Assessment OA Simulation
VERSION 2 | Non-Overlapping Practice Exam |
Pass Guaranteed - A+ Graded
Domain 1: Cost Concepts, Behavior & Classification (15-20%)
Q1: Riverbend Manufacturing produces custom kayaks. The company's maintenance costs
at various production levels are:
Table
Copy
Production Volume (units) Total Maintenance Cost
1,500 $22,500
2,500 $27,500
3,500 $32,500
4,500 $37,500
Using the high-low method, what is the estimated fixed maintenance cost?
A. $5,000
B. $15,000 [CORRECT]
C. $17,500
D. $20,000
Correct Answer: B
,2
Rationale:
Step 1: Identify high and low activity points.
High activity: 4,500 units, $37,500
Low activity: 1,500 units, $22,500
Step 2: Calculate variable cost per unit.
Change in cost = $37,500 - $22,500 = $15,000
Change in activity = 4,500 - 1,500 = 3,000 units
Variable cost per unit = $15,,000 = $5.00 per unit
Step 3: Calculate fixed cost component.
Using low point: $22,500 - ($5.00 × 1,500) = $22,500 - $7,500 = $15,000
Using high point: $37,500 - ($5.00 × 4,500) = $37,500 - $22,500 = $15,000 ✓
Distractor Analysis:
A ($5,000): Results from calculating $22,500 - ($5.00 × 3,500) using wrong activity level.
B ($15,000): CORRECT - Proper calculation of fixed cost component.
C ($17,500): Results from using average cost ($30,000) minus average variable cost ($12,500).
D ($20,000): Results from reversing high/low points in variable cost calculation.
Q2: Which of the following costs would be classified as a period cost for a merchandising
company?
A. Freight-in on merchandise purchases
B. Advertising expense [CORRECT]
C. Cost of goods purchased
D. Warehouse depreciation
Correct Answer: B
Rationale: Period costs are expenses not included in product costs and are expensed in the
period incurred.
Advertising expense is a selling expense, not related to acquiring or manufacturing inventory. It
is expensed immediately.
Freight-in (A) and cost of goods purchased (C) are product costs (part of inventory).
,3
Warehouse depreciation (D) is typically part of product cost or operating overhead depending on
use.
Distractor Analysis:
A: Freight-in is a product cost (added to inventory value).
B: CORRECT - Advertising is always a period cost.
C: Cost of goods purchased is the primary product cost for merchandisers.
D: Warehouse depreciation is generally considered part of product cost if related to storage of
inventory.
Q3: In a service organization such as a consulting firm, which cost classification is most
appropriate for partner salaries?
A. Manufacturing overhead
B. Direct labor [CORRECT]
C. Period cost
D. Indirect materials
Correct Answer: B
Rationale: In service organizations, labor costs of professionals who directly serve clients are
direct labor (the primary product cost). Unlike manufacturing, service companies have minimal
materials or overhead; labor is the main cost driver.
Distractor Analysis:
A: Manufacturing overhead doesn't exist in pure service firms.
B: CORRECT - Partner/consultant salaries are direct labor in service costing.
C: While salaries are expensed when incurred, in managerial accounting they are traced as direct
labor costs to specific engagements.
D: Indirect materials are irrelevant in professional service contexts.
Q4: GreenTech Solutions is analyzing its mixed utility costs using regression analysis. The
output shows:
Intercept: $8,500
X Variable (machine hours) coefficient: $4.25
, 4
R-squared: 0.92
Which statement is correct?
A. The company should use the high-low method instead due to low correlation
B. Fixed utility costs are estimated at $8,500 per month [CORRECT]
C. Variable costs are $4.25 per unit produced
D. The R-squared indicates 8% of cost variation is explained by machine hours
Correct Answer: B
Rationale: In regression analysis Y = a + bX:
a (intercept) = fixed cost component = $8,500
b (coefficient) = variable cost per unit of activity = $4.25 per machine hour
R-squared of 0.92 indicates 92% of cost variation is explained by the independent variable
(strong relationship)
Distractor Analysis:
A: R-squared of 0.92 indicates strong correlation; regression is preferred over high-low.
B: CORRECT - The intercept represents fixed costs.
C: Variable cost is $4.25 per machine hour, not per unit produced (different cost driver).
D: R-squared of 0.92 means 92% (not 8%) of variation is explained.
Q5: Classify the following costs for a pharmaceutical manufacturer as product or period
costs:
Research and development for new drugs
Quality control inspection wages
CEO salary
Depreciation on manufacturing equipment
How many are product costs?
A. 1
B. 2 [CORRECT]
C. 3
D. 4
Correct Answer: B
WGU D101 Cost and Managerial Accounting
ACTUAL EXAM QUESTIONS AND ANSWERS
2026/2027 | Objective Assessment OA Simulation
VERSION 2 | Non-Overlapping Practice Exam |
Pass Guaranteed - A+ Graded
Domain 1: Cost Concepts, Behavior & Classification (15-20%)
Q1: Riverbend Manufacturing produces custom kayaks. The company's maintenance costs
at various production levels are:
Table
Copy
Production Volume (units) Total Maintenance Cost
1,500 $22,500
2,500 $27,500
3,500 $32,500
4,500 $37,500
Using the high-low method, what is the estimated fixed maintenance cost?
A. $5,000
B. $15,000 [CORRECT]
C. $17,500
D. $20,000
Correct Answer: B
,2
Rationale:
Step 1: Identify high and low activity points.
High activity: 4,500 units, $37,500
Low activity: 1,500 units, $22,500
Step 2: Calculate variable cost per unit.
Change in cost = $37,500 - $22,500 = $15,000
Change in activity = 4,500 - 1,500 = 3,000 units
Variable cost per unit = $15,,000 = $5.00 per unit
Step 3: Calculate fixed cost component.
Using low point: $22,500 - ($5.00 × 1,500) = $22,500 - $7,500 = $15,000
Using high point: $37,500 - ($5.00 × 4,500) = $37,500 - $22,500 = $15,000 ✓
Distractor Analysis:
A ($5,000): Results from calculating $22,500 - ($5.00 × 3,500) using wrong activity level.
B ($15,000): CORRECT - Proper calculation of fixed cost component.
C ($17,500): Results from using average cost ($30,000) minus average variable cost ($12,500).
D ($20,000): Results from reversing high/low points in variable cost calculation.
Q2: Which of the following costs would be classified as a period cost for a merchandising
company?
A. Freight-in on merchandise purchases
B. Advertising expense [CORRECT]
C. Cost of goods purchased
D. Warehouse depreciation
Correct Answer: B
Rationale: Period costs are expenses not included in product costs and are expensed in the
period incurred.
Advertising expense is a selling expense, not related to acquiring or manufacturing inventory. It
is expensed immediately.
Freight-in (A) and cost of goods purchased (C) are product costs (part of inventory).
,3
Warehouse depreciation (D) is typically part of product cost or operating overhead depending on
use.
Distractor Analysis:
A: Freight-in is a product cost (added to inventory value).
B: CORRECT - Advertising is always a period cost.
C: Cost of goods purchased is the primary product cost for merchandisers.
D: Warehouse depreciation is generally considered part of product cost if related to storage of
inventory.
Q3: In a service organization such as a consulting firm, which cost classification is most
appropriate for partner salaries?
A. Manufacturing overhead
B. Direct labor [CORRECT]
C. Period cost
D. Indirect materials
Correct Answer: B
Rationale: In service organizations, labor costs of professionals who directly serve clients are
direct labor (the primary product cost). Unlike manufacturing, service companies have minimal
materials or overhead; labor is the main cost driver.
Distractor Analysis:
A: Manufacturing overhead doesn't exist in pure service firms.
B: CORRECT - Partner/consultant salaries are direct labor in service costing.
C: While salaries are expensed when incurred, in managerial accounting they are traced as direct
labor costs to specific engagements.
D: Indirect materials are irrelevant in professional service contexts.
Q4: GreenTech Solutions is analyzing its mixed utility costs using regression analysis. The
output shows:
Intercept: $8,500
X Variable (machine hours) coefficient: $4.25
, 4
R-squared: 0.92
Which statement is correct?
A. The company should use the high-low method instead due to low correlation
B. Fixed utility costs are estimated at $8,500 per month [CORRECT]
C. Variable costs are $4.25 per unit produced
D. The R-squared indicates 8% of cost variation is explained by machine hours
Correct Answer: B
Rationale: In regression analysis Y = a + bX:
a (intercept) = fixed cost component = $8,500
b (coefficient) = variable cost per unit of activity = $4.25 per machine hour
R-squared of 0.92 indicates 92% of cost variation is explained by the independent variable
(strong relationship)
Distractor Analysis:
A: R-squared of 0.92 indicates strong correlation; regression is preferred over high-low.
B: CORRECT - The intercept represents fixed costs.
C: Variable cost is $4.25 per machine hour, not per unit produced (different cost driver).
D: R-squared of 0.92 means 92% (not 8%) of variation is explained.
Q5: Classify the following costs for a pharmaceutical manufacturer as product or period
costs:
Research and development for new drugs
Quality control inspection wages
CEO salary
Depreciation on manufacturing equipment
How many are product costs?
A. 1
B. 2 [CORRECT]
C. 3
D. 4
Correct Answer: B
