WGU D101 Cost and Managerial Accounting Practice Test
2026 | Verified Answers | Exam Prep
1. Describe how Variable Manufacturing Overhead impacts overall production
costs.
Variable Manufacturing Overhead does not impact production costs.
Variable Manufacturing Overhead remains constant regardless of
production levels.
Variable Manufacturing Overhead affects overall production costs
by increasing or decreasing based on the level of production
activity.
Variable Manufacturing Overhead only includes fixed costs.
2. A furniture manufacturer receives a custom order for a unique dining table.
Which costing method should they use to accurately track costs associated
with this order?
Activity-based costing
Process costing
Job order costing
Standard costing
3. What is the formula for the labor rate variance?
Standard wage rate times the difference between the actual hours
worked and the standard hours worked
Actual wage rate times the difference between the actual hours
worked and the standard hours worked
Actual hours worked times the difference between the actual wage
, rate and the standard wage rate
Standard hours worked times the difference between the actual wage
rate and the standard wage rate
4. How does Target Income influence managerial decisions in a business?
Target Income guides management in setting sales goals and
controlling costs to achieve desired profitability.
Target Income reflects the total revenue generated by the company.
Target Income is used solely for tax calculations.
Target Income is irrelevant to operational planning.
5. In a scenario where a company has invested heavily in a marketing campaign
that is not yielding expected results, how should the concept of Sunk Costs
influence their next steps?
The company should continue investing in the campaign because of
the Sunk Costs.
The company should analyze the Sunk Costs to justify further
investment.
The company should abandon the campaign immediately without
further analysis.
The company should ignore the Sunk Costs and evaluate future
costs and potential benefits of continuing or discontinuing the
campaign.
6. If a manufacturing company decides to cut costs by reducing facility support
activities, what potential impact could this have on the production process?
It would likely decrease the cost of direct materials.
It could lead to inefficiencies and disruptions in the production
process.
, It would have no impact on production efficiency.
It would improve the quality of the final product.
7. What do the Equivalent Units of Production measure?
Measure the work done during the period expressed in fully
completed units
Units that are homogenous
Measure units that are 100% complete
Units that are similar to each other
8. Equivalent units of production would best be defined as:
Completed units that are produced through the same process.
Number of units transferred out during the period, regardless of when
the units were started into production.
The number of whole units that could have been completed with
direct material, direct labor, and overhead used during the period.
Units of production that are the same kind of product.
9. What is the primary economic activity of a service organization?
Manufacturing physical goods for sale.
Producing a nonphysical product that provides value to a customer.
Selling products at a retail location.
Providing financial services exclusively.
10. Which of the following is true of cost-volume-profit (CVP) analysis?
Cost-volume-profit analysis considers inventory as it embodies costs
of a previous period.
, Cost-volume-profit analysis assumes that cost and revenue functions
are non-linear.
Cost-volume-profit analysis is a long-run decision-making tool.
Cost-volume-profit analysis assumes that all units produced are
sold.
11. If a company increases its production from 1,000 units to 1,500 units, how
would this affect its total variable costs?
Total variable costs would remain the same.
Total variable costs would decrease due to economies of scale.
Total variable costs would increase but not in direct proportion.
Total variable costs would increase proportionally to the increase in
production.
12. Which of the following statements regarding the equivalent units of
production for a processing department is true?
The total equivalent units of production equals the sum of the units
completed and transferred out of the processing department plus
the number of units in ending work in process inventory.
The total equivalent units of production is the numerator of the
fraction used to compute a processing department's cost per
equivalent unit for an accounting period.
The total equivalent units of production measures the work
performed, including both fully completed units and partially
completed units, expressed in terms of completed units.
During any given accounting period, the total equivalent units of
production must be the same for both direct materials and
conversion costs.
13. Describe the significance of Per-unit Contribution in the context of cost
2026 | Verified Answers | Exam Prep
1. Describe how Variable Manufacturing Overhead impacts overall production
costs.
Variable Manufacturing Overhead does not impact production costs.
Variable Manufacturing Overhead remains constant regardless of
production levels.
Variable Manufacturing Overhead affects overall production costs
by increasing or decreasing based on the level of production
activity.
Variable Manufacturing Overhead only includes fixed costs.
2. A furniture manufacturer receives a custom order for a unique dining table.
Which costing method should they use to accurately track costs associated
with this order?
Activity-based costing
Process costing
Job order costing
Standard costing
3. What is the formula for the labor rate variance?
Standard wage rate times the difference between the actual hours
worked and the standard hours worked
Actual wage rate times the difference between the actual hours
worked and the standard hours worked
Actual hours worked times the difference between the actual wage
, rate and the standard wage rate
Standard hours worked times the difference between the actual wage
rate and the standard wage rate
4. How does Target Income influence managerial decisions in a business?
Target Income guides management in setting sales goals and
controlling costs to achieve desired profitability.
Target Income reflects the total revenue generated by the company.
Target Income is used solely for tax calculations.
Target Income is irrelevant to operational planning.
5. In a scenario where a company has invested heavily in a marketing campaign
that is not yielding expected results, how should the concept of Sunk Costs
influence their next steps?
The company should continue investing in the campaign because of
the Sunk Costs.
The company should analyze the Sunk Costs to justify further
investment.
The company should abandon the campaign immediately without
further analysis.
The company should ignore the Sunk Costs and evaluate future
costs and potential benefits of continuing or discontinuing the
campaign.
6. If a manufacturing company decides to cut costs by reducing facility support
activities, what potential impact could this have on the production process?
It would likely decrease the cost of direct materials.
It could lead to inefficiencies and disruptions in the production
process.
, It would have no impact on production efficiency.
It would improve the quality of the final product.
7. What do the Equivalent Units of Production measure?
Measure the work done during the period expressed in fully
completed units
Units that are homogenous
Measure units that are 100% complete
Units that are similar to each other
8. Equivalent units of production would best be defined as:
Completed units that are produced through the same process.
Number of units transferred out during the period, regardless of when
the units were started into production.
The number of whole units that could have been completed with
direct material, direct labor, and overhead used during the period.
Units of production that are the same kind of product.
9. What is the primary economic activity of a service organization?
Manufacturing physical goods for sale.
Producing a nonphysical product that provides value to a customer.
Selling products at a retail location.
Providing financial services exclusively.
10. Which of the following is true of cost-volume-profit (CVP) analysis?
Cost-volume-profit analysis considers inventory as it embodies costs
of a previous period.
, Cost-volume-profit analysis assumes that cost and revenue functions
are non-linear.
Cost-volume-profit analysis is a long-run decision-making tool.
Cost-volume-profit analysis assumes that all units produced are
sold.
11. If a company increases its production from 1,000 units to 1,500 units, how
would this affect its total variable costs?
Total variable costs would remain the same.
Total variable costs would decrease due to economies of scale.
Total variable costs would increase but not in direct proportion.
Total variable costs would increase proportionally to the increase in
production.
12. Which of the following statements regarding the equivalent units of
production for a processing department is true?
The total equivalent units of production equals the sum of the units
completed and transferred out of the processing department plus
the number of units in ending work in process inventory.
The total equivalent units of production is the numerator of the
fraction used to compute a processing department's cost per
equivalent unit for an accounting period.
The total equivalent units of production measures the work
performed, including both fully completed units and partially
completed units, expressed in terms of completed units.
During any given accounting period, the total equivalent units of
production must be the same for both direct materials and
conversion costs.
13. Describe the significance of Per-unit Contribution in the context of cost
