WGU D101 Cost and Managerial Accounting
| OA | Objective Assessment | 110 Actual
Questions and Answers (Verified Answers),
100% Guaranteed Pass || Complete A+ Guide
1. Which of the following best describes the primary focus of managerial
accounting?
A. Providing information to external investors
B. Ensuring compliance with tax regulations
C. Helping internal managers make decisions
D. Recording historical financial transactions
C. Correct! Managerial accounting focuses on providing information to internal
users (managers) for planning, controlling, and decision-making, unlike financial
accounting which serves external users.
2. In activity-based costing (ABC), what is the first step in implementing the
system?
A. Assign overhead costs to products
B. Identify cost pools and cost drivers
C. Calculate predetermined overhead rate
D. Allocate direct labor costs
B. Correct! The first step in ABC is to identify the major activities (cost pools)
and the factors that drive their costs (cost drivers), then trace costs to products
based on their usage of activities.
3. A company has fixed costs of $150,000, variable cost per unit of $30, and
selling price per unit of $50. What is the break-even point in units?
A. 3,000 units
B. 5,000 units
C. 7,500 units
D. 10,000 units
C. Correct! Break-even units = Fixed costs ÷ Contribution margin per unit =
$150,000 ÷ ($50 – $30) = $150,000 ÷ $20 = 7,500 units.
, 4. Which of the following is a disadvantage of using a single plantwide
overhead rate?
A. It is complex and time-consuming to calculate
B. It may overcost high-volume products and undercost low-volume
products
C. It requires multiple cost drivers
D. It does not comply with GAAP
B. Correct! A single plantwide rate often distorts product costs because it assumes
all products consume overhead in the same proportion, leading to cross-
subsidization of products.
5. Under process costing, the cost of ending work-in-process inventory is
calculated by multiplying equivalent units in ending WIP by:
A. Total costs incurred during the period
B. Cost per equivalent unit
C. Units started during the period
D. Conversion cost only
B. Correct! Ending WIP cost = Equivalent units in ending WIP × Cost per
equivalent unit (for materials and conversion costs separately, then summed).
6. Which of the following costs would be classified as a period cost?
A. Depreciation on factory equipment
B. Direct materials used in production
C. Sales commissions paid to salespeople
D. Wages of assembly line workers
C. Correct! Period costs are non-manufacturing costs (selling and administrative)
expensed in the period incurred; sales commissions are a selling expense.
7. A company’s contribution margin ratio is 40%. If sales increase by
$100,000, operating income will increase by:
A. $40,000
B. $60,000
C. $100,000
D. Cannot be determined
A. Correct! Change in operating income = Change in sales × Contribution margin
ratio = $100,000 × 0.40 = $40,000, assuming fixed costs remain unchanged.
, 8. What is the formula for the cost of goods manufactured?
A. Beginning WIP + Total manufacturing costs – Ending WIP
B. Beginning finished goods + Cost of goods manufactured – Ending
finished goods
C. Direct materials + Direct labor + Manufacturing overhead
D. Total manufacturing costs – Ending WIP
A. Correct! Cost of goods manufactured = Beginning work-in-process inventory +
Total manufacturing costs incurred – Ending work-in-process inventory.
9. Which of the following is an example of a unit-level activity in activity-
based costing?
A. Setting up a production run
B. Inspecting finished products
C. Machining a product component
D. Designing a new product
C. Correct! Unit-level activities are performed each time a unit is produced;
machining is performed on each unit. Setup is batch-level, inspection may be batch
or product-level, design is product-level.
10.A company has the following information:
Sales = $500,000, Variable costs = $300,000, Fixed costs = $150,000. What
is the degree of operating leverage?
A. 2.0
B. 3.0
C. 4.0
D. 5.0
C. Correct! Contribution margin = $500,000 – $300,000 = $200,000. Operating
income = $200,000 – $150,000 = $50,000. Degree of operating leverage =
Contribution margin ÷ Operating income = $200,000 ÷ $50,000 = 4.0.
11.In process costing, which of the following statements is true about units
started and completed during the period?
A. They are considered 50% complete for conversion costs
B. They are 100% complete for both materials and conversion costs
C. They are excluded from equivalent unit calculations
D. They only include units completed from beginning inventory
| OA | Objective Assessment | 110 Actual
Questions and Answers (Verified Answers),
100% Guaranteed Pass || Complete A+ Guide
1. Which of the following best describes the primary focus of managerial
accounting?
A. Providing information to external investors
B. Ensuring compliance with tax regulations
C. Helping internal managers make decisions
D. Recording historical financial transactions
C. Correct! Managerial accounting focuses on providing information to internal
users (managers) for planning, controlling, and decision-making, unlike financial
accounting which serves external users.
2. In activity-based costing (ABC), what is the first step in implementing the
system?
A. Assign overhead costs to products
B. Identify cost pools and cost drivers
C. Calculate predetermined overhead rate
D. Allocate direct labor costs
B. Correct! The first step in ABC is to identify the major activities (cost pools)
and the factors that drive their costs (cost drivers), then trace costs to products
based on their usage of activities.
3. A company has fixed costs of $150,000, variable cost per unit of $30, and
selling price per unit of $50. What is the break-even point in units?
A. 3,000 units
B. 5,000 units
C. 7,500 units
D. 10,000 units
C. Correct! Break-even units = Fixed costs ÷ Contribution margin per unit =
$150,000 ÷ ($50 – $30) = $150,000 ÷ $20 = 7,500 units.
, 4. Which of the following is a disadvantage of using a single plantwide
overhead rate?
A. It is complex and time-consuming to calculate
B. It may overcost high-volume products and undercost low-volume
products
C. It requires multiple cost drivers
D. It does not comply with GAAP
B. Correct! A single plantwide rate often distorts product costs because it assumes
all products consume overhead in the same proportion, leading to cross-
subsidization of products.
5. Under process costing, the cost of ending work-in-process inventory is
calculated by multiplying equivalent units in ending WIP by:
A. Total costs incurred during the period
B. Cost per equivalent unit
C. Units started during the period
D. Conversion cost only
B. Correct! Ending WIP cost = Equivalent units in ending WIP × Cost per
equivalent unit (for materials and conversion costs separately, then summed).
6. Which of the following costs would be classified as a period cost?
A. Depreciation on factory equipment
B. Direct materials used in production
C. Sales commissions paid to salespeople
D. Wages of assembly line workers
C. Correct! Period costs are non-manufacturing costs (selling and administrative)
expensed in the period incurred; sales commissions are a selling expense.
7. A company’s contribution margin ratio is 40%. If sales increase by
$100,000, operating income will increase by:
A. $40,000
B. $60,000
C. $100,000
D. Cannot be determined
A. Correct! Change in operating income = Change in sales × Contribution margin
ratio = $100,000 × 0.40 = $40,000, assuming fixed costs remain unchanged.
, 8. What is the formula for the cost of goods manufactured?
A. Beginning WIP + Total manufacturing costs – Ending WIP
B. Beginning finished goods + Cost of goods manufactured – Ending
finished goods
C. Direct materials + Direct labor + Manufacturing overhead
D. Total manufacturing costs – Ending WIP
A. Correct! Cost of goods manufactured = Beginning work-in-process inventory +
Total manufacturing costs incurred – Ending work-in-process inventory.
9. Which of the following is an example of a unit-level activity in activity-
based costing?
A. Setting up a production run
B. Inspecting finished products
C. Machining a product component
D. Designing a new product
C. Correct! Unit-level activities are performed each time a unit is produced;
machining is performed on each unit. Setup is batch-level, inspection may be batch
or product-level, design is product-level.
10.A company has the following information:
Sales = $500,000, Variable costs = $300,000, Fixed costs = $150,000. What
is the degree of operating leverage?
A. 2.0
B. 3.0
C. 4.0
D. 5.0
C. Correct! Contribution margin = $500,000 – $300,000 = $200,000. Operating
income = $200,000 – $150,000 = $50,000. Degree of operating leverage =
Contribution margin ÷ Operating income = $200,000 ÷ $50,000 = 4.0.
11.In process costing, which of the following statements is true about units
started and completed during the period?
A. They are considered 50% complete for conversion costs
B. They are 100% complete for both materials and conversion costs
C. They are excluded from equivalent unit calculations
D. They only include units completed from beginning inventory
