WGU D196 OA EXAM REVIEW QUESTIONS
WITH ACCURATE SOLUTIONS 2026
▶ 32. Activity based costing could be used by which of the following
companies?
a.Large commercial and industrial construction
b.Healthcare organization
c.Car manufacturing company
d. All of the above could use activity based costing. Answer: d
▶ 33. How are the wages of a production supervisors classified in a
manufacturing company?
a.Direct labor expense
b. Manufacturing overhead
c. Selling expense
d .Direct materials expense. Answer: b
▶ 34. Which of the following is not an example of a cost driver?
a. Administrative expenses
b. Direct labor hours
c. Machine hours
d .Number of inspections. Answer: a
▶ 35. What is not an example of direct materials?
a. Cost of aluminum in making an airplane
b. Cost of saws and hammers in constructing a house
c .Cost of fabric in making clothing
d. Cost of wood in making furniture. Answer: b
▶ 36. Which describes overapplied overhead?
Less has been spent than anticipated for the level of achieved production
b. More has been spent than anticipated for the level of achieved
production
c. More has been spent than anticipated for direct labor and materials
d None of the above. Answer: a
,▶ 37. Which statement is true with respect to activity-based costing (ABC)
systems?
a. An ABC system helps to provide more accurate product costing and
better decision making
b. Implementing an ABC system requires very little analysis of the factors
that create overhead costs
c. Implementing an ABC system requires only a careful calculation of total
direct labor hours
d. An ABC system assumes that all products, projects, and processes
consume the overhead infrastructure services in direct proportion to a
single measure of activity.. Answer: a
▶ 38. What is the first budget that is prepared in a manufacturing
business?
a .Direct materials
b. Production
c. Sales
d .Direct labor. Answer: c
▶ 39. What does a manager have control over in an investment center? a.
Costs , Revenue , and Assets
b. Investments
c .Costs and .Revenue
d. Assets. Answer: a
▶ 40. If budgeted costs are higher than actual costs, which statement is
true?
a. The cost variance is favorable
b .Budgeted cost are estimated too low
c. Actual costs are too high
d. The cost variance is unfavorable. Answer: a
▶ 41. A company repays $80,000 borrowed from a bank. How does this
transaction affect the accounting equation of the borrowing company?
a. Assets decrease by $80,000; owners' equity increases by $80,000 b.
Assets decrease by $80,000; revenues decrease by$80,000
c. Assets decrease by $80,000; liabilities decrease by $80,000
d. Assets decrease by $80,000; liabilities increase by $80,000. Answer: c
, ▶ 42. For purposes of cash flow classification in the statement of cash
flows, which item is an investing activity?
a. Repaying loans
b. Borrowing money
c. Distribution to owners
d. Purchasing land. Answer: d
▶ 43. Which of the following is used by creditors, investors and other
external users?
a. Balance Sheet
b. Statement of Cash Flows
c. Corporate tax returns
d. All of the above. Answer: d
▶ 44. Which type of account is common stock?
a. Asset
b. Liability
c. Equity
d. Revenue. Answer: c
▶ 45. Which type of account is inventory?
a. Expense
b. Equity
c. Asset
d. Liability. Answer: c
▶ 46. Which budget would include salaries of sales managers and a
company president?
a. Manufacturing overhead budget
b. Selling and administrative expense budget
c. Direct labor budget
d. Sales. Answer: b
▶ 47. Which label is given to the cost of wages for an assembly line
worker?
a. Manufacturing overhead
b. Direct labor
c. Direct materials
d. Selling and administrative. Answer: b
WITH ACCURATE SOLUTIONS 2026
▶ 32. Activity based costing could be used by which of the following
companies?
a.Large commercial and industrial construction
b.Healthcare organization
c.Car manufacturing company
d. All of the above could use activity based costing. Answer: d
▶ 33. How are the wages of a production supervisors classified in a
manufacturing company?
a.Direct labor expense
b. Manufacturing overhead
c. Selling expense
d .Direct materials expense. Answer: b
▶ 34. Which of the following is not an example of a cost driver?
a. Administrative expenses
b. Direct labor hours
c. Machine hours
d .Number of inspections. Answer: a
▶ 35. What is not an example of direct materials?
a. Cost of aluminum in making an airplane
b. Cost of saws and hammers in constructing a house
c .Cost of fabric in making clothing
d. Cost of wood in making furniture. Answer: b
▶ 36. Which describes overapplied overhead?
Less has been spent than anticipated for the level of achieved production
b. More has been spent than anticipated for the level of achieved
production
c. More has been spent than anticipated for direct labor and materials
d None of the above. Answer: a
,▶ 37. Which statement is true with respect to activity-based costing (ABC)
systems?
a. An ABC system helps to provide more accurate product costing and
better decision making
b. Implementing an ABC system requires very little analysis of the factors
that create overhead costs
c. Implementing an ABC system requires only a careful calculation of total
direct labor hours
d. An ABC system assumes that all products, projects, and processes
consume the overhead infrastructure services in direct proportion to a
single measure of activity.. Answer: a
▶ 38. What is the first budget that is prepared in a manufacturing
business?
a .Direct materials
b. Production
c. Sales
d .Direct labor. Answer: c
▶ 39. What does a manager have control over in an investment center? a.
Costs , Revenue , and Assets
b. Investments
c .Costs and .Revenue
d. Assets. Answer: a
▶ 40. If budgeted costs are higher than actual costs, which statement is
true?
a. The cost variance is favorable
b .Budgeted cost are estimated too low
c. Actual costs are too high
d. The cost variance is unfavorable. Answer: a
▶ 41. A company repays $80,000 borrowed from a bank. How does this
transaction affect the accounting equation of the borrowing company?
a. Assets decrease by $80,000; owners' equity increases by $80,000 b.
Assets decrease by $80,000; revenues decrease by$80,000
c. Assets decrease by $80,000; liabilities decrease by $80,000
d. Assets decrease by $80,000; liabilities increase by $80,000. Answer: c
, ▶ 42. For purposes of cash flow classification in the statement of cash
flows, which item is an investing activity?
a. Repaying loans
b. Borrowing money
c. Distribution to owners
d. Purchasing land. Answer: d
▶ 43. Which of the following is used by creditors, investors and other
external users?
a. Balance Sheet
b. Statement of Cash Flows
c. Corporate tax returns
d. All of the above. Answer: d
▶ 44. Which type of account is common stock?
a. Asset
b. Liability
c. Equity
d. Revenue. Answer: c
▶ 45. Which type of account is inventory?
a. Expense
b. Equity
c. Asset
d. Liability. Answer: c
▶ 46. Which budget would include salaries of sales managers and a
company president?
a. Manufacturing overhead budget
b. Selling and administrative expense budget
c. Direct labor budget
d. Sales. Answer: b
▶ 47. Which label is given to the cost of wages for an assembly line
worker?
a. Manufacturing overhead
b. Direct labor
c. Direct materials
d. Selling and administrative. Answer: b
