WGU D196 OA ACTUAL EXAM QUESTIONS
AND COMPLETE STUDY GUIDE 2026
▶ 16. Which overhead allocation method should be used for a trash bag
manufacturer?
a. Product-line costing
b. Process costing
c. ABC costing
d . Job order costing. Answer: b
▶ 17. For relevant range, which costs are approximately linear within a
certain range of production?
a. Fixed costs
b. Variable costs
c. Stepped costs
d. Mixed costs. Answer: b
▶ 18. Which of the following focuses on how a company's activity levels
impact profits?
Job order costing
Cost-Volume-Profit Analysis
Overhead cost allocation
Process costing. Answer: b
▶ 19. Which overhead allocation method should be used for a automobile
repair shop?
a. Product-line costing
b. Process costing
c. ABC costing
d. Job order costing. Answer: d
▶ 20. What is an example of indirect labor?
,a. Factory supervisors wages
b. Security guard wages
c. Maintenance staff wages
d. All of the above are examples of indirect labor. Answer: d
▶ 21. Which of the following is an example of an indirect material?
a.Timber used to construct a house
b. The grease used on machines that manufacture products
c. The fabric used to assemble clothing
d. The circuit board included in a radio. Answer: b
▶ 22. Which of the following is not an operating expense?
a.Advertising and marketing
b.Office supplies
c.Utilities
d. Income taxes. Answer: d
▶ 23. A company reports the following data:
Total sales revenue = $275,000
Number of units sold = 25,000 units
Variable costs = $100,000
If the company is operating at its break-even point, what is the company's
total contribution margin?
a.$250,000
b.$175,000
c.$150,000
d. $125,000. Answer: b
▶ 24. How are period costs reported on an income statement?
a. As revenue
b. As an expense
c. As cost of goods sold
d. As an asset. Answer: b
▶ 25. Which item is an example of a controllable cost?
a. Advertising costs
b. Rent expense
c. Depreciation
d. Customer tastes and economic conditions. Answer: a
, ▶ 26. A company purchases equipment with a note payable. How does this
transaction affect the paying company's accounting equation? a.Asset
increases; Liability increases
b.Asset increases; Asset decreases
c. Asset increases; Expense increases
d .Asset increases; Equity decreases. Answer: a
▶ 27. What is the impact of paying employee wages on the accounting
equation?
a.Increase owner's equity
b.Increase expense
c. Decrease expense
d .Increase asset. Answer: b
▶ 28. Which account is summarized on the balance sheet?
a.Expense account
b. Owner's equity
c. Revenue account
d. Cost of good sold. Answer: b
▶ 29. A retail company purchased inventory costing $100,000. By the end
of the year, inventory costing $75,000 had been sold. How is the cost of
inventory reported in the financial statements?
a.$75,000 COGS on balance sheet
b.$75,000 inventory on balance sheet
c.$75,000 COGS on income statement
d. $75,000 inventory on income statement. Answer: c
▶ 30. Which of the following is an example of a merchandising company?
a.Furniture maker
b.Locksmith
c.Landscaper
d. Clothing store. Answer: d
▶ 31. Actual manufacturing overhead includes which of the following?
a.Direct labor and direct materials expenses
b.Manufacturing costs other than direct labor and direct materials
c. Manufacturing costs including direct labor and direct materials
d .Non-manufacturing costs other than direct labor and direct materials.
Answer: b
AND COMPLETE STUDY GUIDE 2026
▶ 16. Which overhead allocation method should be used for a trash bag
manufacturer?
a. Product-line costing
b. Process costing
c. ABC costing
d . Job order costing. Answer: b
▶ 17. For relevant range, which costs are approximately linear within a
certain range of production?
a. Fixed costs
b. Variable costs
c. Stepped costs
d. Mixed costs. Answer: b
▶ 18. Which of the following focuses on how a company's activity levels
impact profits?
Job order costing
Cost-Volume-Profit Analysis
Overhead cost allocation
Process costing. Answer: b
▶ 19. Which overhead allocation method should be used for a automobile
repair shop?
a. Product-line costing
b. Process costing
c. ABC costing
d. Job order costing. Answer: d
▶ 20. What is an example of indirect labor?
,a. Factory supervisors wages
b. Security guard wages
c. Maintenance staff wages
d. All of the above are examples of indirect labor. Answer: d
▶ 21. Which of the following is an example of an indirect material?
a.Timber used to construct a house
b. The grease used on machines that manufacture products
c. The fabric used to assemble clothing
d. The circuit board included in a radio. Answer: b
▶ 22. Which of the following is not an operating expense?
a.Advertising and marketing
b.Office supplies
c.Utilities
d. Income taxes. Answer: d
▶ 23. A company reports the following data:
Total sales revenue = $275,000
Number of units sold = 25,000 units
Variable costs = $100,000
If the company is operating at its break-even point, what is the company's
total contribution margin?
a.$250,000
b.$175,000
c.$150,000
d. $125,000. Answer: b
▶ 24. How are period costs reported on an income statement?
a. As revenue
b. As an expense
c. As cost of goods sold
d. As an asset. Answer: b
▶ 25. Which item is an example of a controllable cost?
a. Advertising costs
b. Rent expense
c. Depreciation
d. Customer tastes and economic conditions. Answer: a
, ▶ 26. A company purchases equipment with a note payable. How does this
transaction affect the paying company's accounting equation? a.Asset
increases; Liability increases
b.Asset increases; Asset decreases
c. Asset increases; Expense increases
d .Asset increases; Equity decreases. Answer: a
▶ 27. What is the impact of paying employee wages on the accounting
equation?
a.Increase owner's equity
b.Increase expense
c. Decrease expense
d .Increase asset. Answer: b
▶ 28. Which account is summarized on the balance sheet?
a.Expense account
b. Owner's equity
c. Revenue account
d. Cost of good sold. Answer: b
▶ 29. A retail company purchased inventory costing $100,000. By the end
of the year, inventory costing $75,000 had been sold. How is the cost of
inventory reported in the financial statements?
a.$75,000 COGS on balance sheet
b.$75,000 inventory on balance sheet
c.$75,000 COGS on income statement
d. $75,000 inventory on income statement. Answer: c
▶ 30. Which of the following is an example of a merchandising company?
a.Furniture maker
b.Locksmith
c.Landscaper
d. Clothing store. Answer: d
▶ 31. Actual manufacturing overhead includes which of the following?
a.Direct labor and direct materials expenses
b.Manufacturing costs other than direct labor and direct materials
c. Manufacturing costs including direct labor and direct materials
d .Non-manufacturing costs other than direct labor and direct materials.
Answer: b
