WGU C253 OA ADVANCED MANAGERIAL
ACCOUNTING FINAL EXAM PRACTICE 2024
QUESTIONS WITH CORRECT DETAILED
ANSWERS AND ELABORATIONS A+
Financial accounting - ANSWER >>> the phase of accounting that is
concerned with reporting historical financial information to external
parties, such as stockholders, creditors, and regulators
Managerial accounting - ANSWER >>> the phase of accounting that
is concerned with providing information to managers for use within the
organization
Purpose of Cost Classification- Assigning costs to cost objects -
ANSWER >>> • Direct Costs (can be easily traced)
• Indirect costs (cannot be easily traced)
Purpose of Cost Classification- Accounting for costs in manufacturing
companies - ANSWER >>> • Manufacturing Costs
o Direct materials
o Direct labor
o Manufacturing overhead
• Nonmanufacturing Costs
o Selling costs
o Administrative costs
Purpose of Cost Classification- Preparing financial statements -
ANSWER >>> • Product costs (inventoriable)
• Period costs (expensed)
Purpose of Cost Classification- Predicting cost behavior in response to
changes in activity - ANSWER >>> • Variable costs (proportional to
activity)
• Fixed costs (constant in total)
• Mixed costs (has variable and fixed elements)
,Purpose of Cost Classification- Making decisions - ANSWER >>> •
Relevant costs (differs between alternatives)
• Irrelevant costs (should be ignored)
Cost object - ANSWER >>> anything for which cost data are desired.
○ Products
○ Customers
○ Geographic regions
○ Parts of the organization
§ Departments
§ Divisions
Costs classified as - ANSWER >>> ○ Direct
○ Indirect
Direct cost - ANSWER >>> a cost that can be easily and conveniently
traced to a specified cost subject
○ To be traced to a cost object such as a particular product, the cost
must be caused by the cost object
Indirect cost - ANSWER >>> a cost that cannot be easily and
conveniently traced to a specified cost subject
Common cost - ANSWER >>> a cost that is incurred to support a
number of cost objects but that cannot be traced to them individually.
○ The wage cost of the pilot of a 747 airliner is one of all the
passengers on the aircraft. Without pilot, there is no flight and no
passengers. But not part of the pilot's wage is caused by any one
passenger taking the flight.
Manufacturing costs - ANSWER >>> ○ Direct materials
○ Direct labor
○ Manufacturing overhead
Direct materials - ANSWER >>> materials that become an integral
part of a finished product whose costs can be conveniently traced to it
,Raw materials - ANSWER >>> any materials that go into the final
product
-Asset Account
Direct labor (touch labor) - ANSWER >>> factory labor costs that can
be easily traced to individual units of product
Prime costs - ANSWER >>> direct materials costs plus direct labor
cost
Manufacturing overhead - ANSWER >>> all manufacturing costs
except direct materials and direct labor
○ Only those indirect costs associated with operating the factory are
included
○ Also known as:
§ Indirect manufacturing cost
§ Factory overhead
§ Factory burden
Indirect materials - ANSWER >>> small items of material such as glue
and nails that may be an integral part of a finished product, but whose
costs cannot be easily or conveniently traced to it
Indirect labor - ANSWER >>> the labor costs of janitors, supervisors,
material handlers, and other factory workers that cannot be
conveniently traced to particular products
Conversion cost - ANSWER >>> direct labor cost plus manufacturing
overhead cost
Nonmanufacturing costs - ANSWER >>> ○ Selling costs
○ Administrative costs
○ Also called:
§ Selling, general, and administrative (SG&A) costs
§ Selling and administrative costs
, Selling costs - ANSWER >>> all costs that are incurred to secure
customer orders and get the finished product or service into the hands
of the customer
○ Also known as:
§ Order-getting costs
§ Order-filling costs
○ Examples:
§ Advertising
§ Shipping
§ Sales travel
§ Sales commissions
§ Sales salaries
§ Costs of finished goods warehouses
○ Can be direct or indirect
Administrative costs - ANSWER >>> all executive, organizational, and
clerical costs associated with the general management of an
organization, rather than with manufacturing or selling
○ Examples:
§ Executive compensation
§ General accounting
§ Legal counsel
§ Secretarial
§ Public relations
§ Similar costs involved in the overall, general admin of the
organization as a whole
○ Can be direct or indirect
Matching principle - ANSWER >>> based on the accrual concept that
costs incurred to generate a particular revenue should be recognized
as expenses n the same period that the revenue is recognized
○ Cost recognized as expense only when the sale takes place
§ When the benefit occurs
Product costs - ANSWER >>> all costs that are involved in acquiring
or making the product.
○ For manufactured goods -
ACCOUNTING FINAL EXAM PRACTICE 2024
QUESTIONS WITH CORRECT DETAILED
ANSWERS AND ELABORATIONS A+
Financial accounting - ANSWER >>> the phase of accounting that is
concerned with reporting historical financial information to external
parties, such as stockholders, creditors, and regulators
Managerial accounting - ANSWER >>> the phase of accounting that
is concerned with providing information to managers for use within the
organization
Purpose of Cost Classification- Assigning costs to cost objects -
ANSWER >>> • Direct Costs (can be easily traced)
• Indirect costs (cannot be easily traced)
Purpose of Cost Classification- Accounting for costs in manufacturing
companies - ANSWER >>> • Manufacturing Costs
o Direct materials
o Direct labor
o Manufacturing overhead
• Nonmanufacturing Costs
o Selling costs
o Administrative costs
Purpose of Cost Classification- Preparing financial statements -
ANSWER >>> • Product costs (inventoriable)
• Period costs (expensed)
Purpose of Cost Classification- Predicting cost behavior in response to
changes in activity - ANSWER >>> • Variable costs (proportional to
activity)
• Fixed costs (constant in total)
• Mixed costs (has variable and fixed elements)
,Purpose of Cost Classification- Making decisions - ANSWER >>> •
Relevant costs (differs between alternatives)
• Irrelevant costs (should be ignored)
Cost object - ANSWER >>> anything for which cost data are desired.
○ Products
○ Customers
○ Geographic regions
○ Parts of the organization
§ Departments
§ Divisions
Costs classified as - ANSWER >>> ○ Direct
○ Indirect
Direct cost - ANSWER >>> a cost that can be easily and conveniently
traced to a specified cost subject
○ To be traced to a cost object such as a particular product, the cost
must be caused by the cost object
Indirect cost - ANSWER >>> a cost that cannot be easily and
conveniently traced to a specified cost subject
Common cost - ANSWER >>> a cost that is incurred to support a
number of cost objects but that cannot be traced to them individually.
○ The wage cost of the pilot of a 747 airliner is one of all the
passengers on the aircraft. Without pilot, there is no flight and no
passengers. But not part of the pilot's wage is caused by any one
passenger taking the flight.
Manufacturing costs - ANSWER >>> ○ Direct materials
○ Direct labor
○ Manufacturing overhead
Direct materials - ANSWER >>> materials that become an integral
part of a finished product whose costs can be conveniently traced to it
,Raw materials - ANSWER >>> any materials that go into the final
product
-Asset Account
Direct labor (touch labor) - ANSWER >>> factory labor costs that can
be easily traced to individual units of product
Prime costs - ANSWER >>> direct materials costs plus direct labor
cost
Manufacturing overhead - ANSWER >>> all manufacturing costs
except direct materials and direct labor
○ Only those indirect costs associated with operating the factory are
included
○ Also known as:
§ Indirect manufacturing cost
§ Factory overhead
§ Factory burden
Indirect materials - ANSWER >>> small items of material such as glue
and nails that may be an integral part of a finished product, but whose
costs cannot be easily or conveniently traced to it
Indirect labor - ANSWER >>> the labor costs of janitors, supervisors,
material handlers, and other factory workers that cannot be
conveniently traced to particular products
Conversion cost - ANSWER >>> direct labor cost plus manufacturing
overhead cost
Nonmanufacturing costs - ANSWER >>> ○ Selling costs
○ Administrative costs
○ Also called:
§ Selling, general, and administrative (SG&A) costs
§ Selling and administrative costs
, Selling costs - ANSWER >>> all costs that are incurred to secure
customer orders and get the finished product or service into the hands
of the customer
○ Also known as:
§ Order-getting costs
§ Order-filling costs
○ Examples:
§ Advertising
§ Shipping
§ Sales travel
§ Sales commissions
§ Sales salaries
§ Costs of finished goods warehouses
○ Can be direct or indirect
Administrative costs - ANSWER >>> all executive, organizational, and
clerical costs associated with the general management of an
organization, rather than with manufacturing or selling
○ Examples:
§ Executive compensation
§ General accounting
§ Legal counsel
§ Secretarial
§ Public relations
§ Similar costs involved in the overall, general admin of the
organization as a whole
○ Can be direct or indirect
Matching principle - ANSWER >>> based on the accrual concept that
costs incurred to generate a particular revenue should be recognized
as expenses n the same period that the revenue is recognized
○ Cost recognized as expense only when the sale takes place
§ When the benefit occurs
Product costs - ANSWER >>> all costs that are involved in acquiring
or making the product.
○ For manufactured goods -
