WGU D101 COST AND MANAGERIAL ACCOUNTING
OBJECTIVE ASSESSMENT ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS WITH RATIONALES GRADED A+ LATEST
1. Which of the following costs is considered a period cost?
A. Direct materials
B. Manufacturing overhead
C. Depreciation on factory equipment
D. Selling and administrative expenses
Answer: D
Rationale: Period costs are not tied to the production process and are expensed in the
period incurred. Selling and administrative expenses are period costs. Direct
materials and manufacturing overhead are product costs. Depreciation on factory
equipment is manufacturing overhead (product cost).
2. A company uses a job-order costing system. Which of the following is the
primary document used to record direct labor costs?
A. Job cost sheet
B. Materials requisition form
C. Time ticket
D. Purchase order
Answer: C
Rationale: Time tickets record employee labor hours and are used to allocate direct
labor costs to specific jobs. Job cost sheets summarize total costs. Materials
requisition forms track materials used, and purchase orders are used for buying
materials.
1|Page
,3. If a company uses the high-low method to estimate variable and fixed costs, which
of the following is true?
A. The highest cost and lowest cost levels are used
B. The highest activity and lowest activity levels are used
C. The highest and lowest selling prices are used
D. The highest and lowest profit levels are used
Answer: B
Rationale: The high-low method uses the highest and lowest activity levels to estimate
variable and fixed cost components.
4. Which of the following best describes contribution margin?
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus total costs
D. Variable costs minus fixed costs
Answer: B
Rationale: Contribution margin is the amount of revenue remaining after variable costs
are subtracted. It contributes to covering fixed costs and profit.
5. A company has a contribution margin ratio of 40% and fixed costs of
$120,000. What is the break-even sales amount?
A. $200,000
B. $300,000
C. $400,000
D. $480,000
Answer: C
Rationale: Break-even sales = Fixed Costs / Contribution Margin Ratio
= 120,.40 = $300,000
Correct Answer: B
2|Page
,6. Which of the following is not included in manufacturing overhead?
A. Factory supervisor salary
B. Indirect materials
C. Direct labor
D. Factory utilities
Answer: C
Rationale: Direct labor is a direct cost, not overhead. Manufacturing overhead includes
indirect labor, indirect materials, and factory utilities.
7. In activity-based costing, which of the following is used to allocate overhead to
products?
A. Direct labor hours
B. Machine hours
C. Activity cost drivers
D. Sales volume
Answer: C
Rationale: Activity-based costing allocates overhead using activity cost drivers that
represent the cause of overhead costs.
8. A company produces 10,000 units. Total fixed costs are $50,000 and total
variable costs are $120,000. What is the cost per unit?
A. $5.00
B. $12.00
C. $17.00
D. $22.00
Answer: C
Rationale: Total cost = Fixed + Variable = 50,000 + 120,000 = 170,000 Cost
per unit = 170,,000 = $17
3|Page
, 9. Which of the following best describes a budget variance?
A. The difference between actual and planned costs
B. The total cost of manufacturing
C. The amount of profit earned
D. The difference between fixed and variable costs
Answer: A
Rationale: Budget variance measures the difference between actual results and
budgeted amounts.
10. A company’s predetermined overhead rate is based on machine hours. If the
budgeted overhead is $300,000 and the budgeted machine hours are 60,000, what
is the predetermined overhead rate?
A. $3.00 per machine hour
B. $5.00 per machine hour
C. $6.00 per machine hour
D. $10.00 per machine hour
Answer: C
Rationale: Predetermined overhead rate = Budgeted overhead / Budgeted machine hours
= 300,,000 = $5.00
Correct Answer: B
11. Which of the following is an example of a fixed cost?
A. Direct materials
B. Hourly wages
C. Rent
D. Sales commissions
Answer: C
4|Page
OBJECTIVE ASSESSMENT ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS WITH RATIONALES GRADED A+ LATEST
1. Which of the following costs is considered a period cost?
A. Direct materials
B. Manufacturing overhead
C. Depreciation on factory equipment
D. Selling and administrative expenses
Answer: D
Rationale: Period costs are not tied to the production process and are expensed in the
period incurred. Selling and administrative expenses are period costs. Direct
materials and manufacturing overhead are product costs. Depreciation on factory
equipment is manufacturing overhead (product cost).
2. A company uses a job-order costing system. Which of the following is the
primary document used to record direct labor costs?
A. Job cost sheet
B. Materials requisition form
C. Time ticket
D. Purchase order
Answer: C
Rationale: Time tickets record employee labor hours and are used to allocate direct
labor costs to specific jobs. Job cost sheets summarize total costs. Materials
requisition forms track materials used, and purchase orders are used for buying
materials.
1|Page
,3. If a company uses the high-low method to estimate variable and fixed costs, which
of the following is true?
A. The highest cost and lowest cost levels are used
B. The highest activity and lowest activity levels are used
C. The highest and lowest selling prices are used
D. The highest and lowest profit levels are used
Answer: B
Rationale: The high-low method uses the highest and lowest activity levels to estimate
variable and fixed cost components.
4. Which of the following best describes contribution margin?
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus total costs
D. Variable costs minus fixed costs
Answer: B
Rationale: Contribution margin is the amount of revenue remaining after variable costs
are subtracted. It contributes to covering fixed costs and profit.
5. A company has a contribution margin ratio of 40% and fixed costs of
$120,000. What is the break-even sales amount?
A. $200,000
B. $300,000
C. $400,000
D. $480,000
Answer: C
Rationale: Break-even sales = Fixed Costs / Contribution Margin Ratio
= 120,.40 = $300,000
Correct Answer: B
2|Page
,6. Which of the following is not included in manufacturing overhead?
A. Factory supervisor salary
B. Indirect materials
C. Direct labor
D. Factory utilities
Answer: C
Rationale: Direct labor is a direct cost, not overhead. Manufacturing overhead includes
indirect labor, indirect materials, and factory utilities.
7. In activity-based costing, which of the following is used to allocate overhead to
products?
A. Direct labor hours
B. Machine hours
C. Activity cost drivers
D. Sales volume
Answer: C
Rationale: Activity-based costing allocates overhead using activity cost drivers that
represent the cause of overhead costs.
8. A company produces 10,000 units. Total fixed costs are $50,000 and total
variable costs are $120,000. What is the cost per unit?
A. $5.00
B. $12.00
C. $17.00
D. $22.00
Answer: C
Rationale: Total cost = Fixed + Variable = 50,000 + 120,000 = 170,000 Cost
per unit = 170,,000 = $17
3|Page
, 9. Which of the following best describes a budget variance?
A. The difference between actual and planned costs
B. The total cost of manufacturing
C. The amount of profit earned
D. The difference between fixed and variable costs
Answer: A
Rationale: Budget variance measures the difference between actual results and
budgeted amounts.
10. A company’s predetermined overhead rate is based on machine hours. If the
budgeted overhead is $300,000 and the budgeted machine hours are 60,000, what
is the predetermined overhead rate?
A. $3.00 per machine hour
B. $5.00 per machine hour
C. $6.00 per machine hour
D. $10.00 per machine hour
Answer: C
Rationale: Predetermined overhead rate = Budgeted overhead / Budgeted machine hours
= 300,,000 = $5.00
Correct Answer: B
11. Which of the following is an example of a fixed cost?
A. Direct materials
B. Hourly wages
C. Rent
D. Sales commissions
Answer: C
4|Page
