WGU D196 OA PRACTICE EXAM QUESTIONS
AND DETAILED SOLUTIONS 2026
▶ 8. How does a classified balance sheet provide useful information to a
decision maker?
a.It distinguishes between current and long-term assets
b.It provides data that are not publicly disclosed
c.It distinguishes liabilities from expenses
D. It provides data for a period of time instead of as a point in time.
Answer: a
▶ 9. In some companies, the performance measures for profit center
managers are heavily influenced by cost allocations downward from
organizational units (such as company headquarters). Why is this a
mistake?
a.Controllable costs should not be included in the performance evaluation
measure of a profit center manager
b.Revenues should not be included in the performance evaluation measure
of a profit center manager
c.Uncontrollable costs should not be included in the performance
evaluation measure of a profit center manager
d. Direct costs should not be included in the performance evaluation
measure of a profit center manager. Answer: c
▶ 10. Which is an example of a product cost?
a.Non-manufacturing personnel costs
b.Rent Expense
c.Office Supplies
d. Raw materials to make a product. Answer: d
▶ 11. Which label is given to the cost of wages for factory supervisors?
a. Direct labor
b.Direct materials
c. Manufacturing overhead
d. Administrative expenses. Answer: c
,▶ 12. A company reports the following data: Price per unit = $20 Variable
costs per unit = $12 Fixed costs = $12,000 Given these data, what is the
variable cost ratio?
a. 40%
b. 25%
c. 16%
d. 60%. Answer: d
▶ 13. If overhead is underapplied, which statement is true?
a.Actual costs exceed applied costs
b.Applied costs exceed actual costs
c.Costs will not be affected
d. Budgeted and applied costs will be equal. Answer: a
▶ 14. Which of the following is not an example of a cost driver?
a.Miles driven
b.Selling costs
c.Machine hours
d. Number of customers. Answer: b
▶ 15. Which item is a period cost?
Manufacturing supplies
Overhead directly tied to the production facility
Raw materials
Marketing expense. Answer: d
▶ 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
AND DETAILED SOLUTIONS 2026
▶ 8. How does a classified balance sheet provide useful information to a
decision maker?
a.It distinguishes between current and long-term assets
b.It provides data that are not publicly disclosed
c.It distinguishes liabilities from expenses
D. It provides data for a period of time instead of as a point in time.
Answer: a
▶ 9. In some companies, the performance measures for profit center
managers are heavily influenced by cost allocations downward from
organizational units (such as company headquarters). Why is this a
mistake?
a.Controllable costs should not be included in the performance evaluation
measure of a profit center manager
b.Revenues should not be included in the performance evaluation measure
of a profit center manager
c.Uncontrollable costs should not be included in the performance
evaluation measure of a profit center manager
d. Direct costs should not be included in the performance evaluation
measure of a profit center manager. Answer: c
▶ 10. Which is an example of a product cost?
a.Non-manufacturing personnel costs
b.Rent Expense
c.Office Supplies
d. Raw materials to make a product. Answer: d
▶ 11. Which label is given to the cost of wages for factory supervisors?
a. Direct labor
b.Direct materials
c. Manufacturing overhead
d. Administrative expenses. Answer: c
,▶ 12. A company reports the following data: Price per unit = $20 Variable
costs per unit = $12 Fixed costs = $12,000 Given these data, what is the
variable cost ratio?
a. 40%
b. 25%
c. 16%
d. 60%. Answer: d
▶ 13. If overhead is underapplied, which statement is true?
a.Actual costs exceed applied costs
b.Applied costs exceed actual costs
c.Costs will not be affected
d. Budgeted and applied costs will be equal. Answer: a
▶ 14. Which of the following is not an example of a cost driver?
a.Miles driven
b.Selling costs
c.Machine hours
d. Number of customers. Answer: b
▶ 15. Which item is a period cost?
Manufacturing supplies
Overhead directly tied to the production facility
Raw materials
Marketing expense. Answer: d
▶ 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
