WGU D101 Cost And Managerial Accounting -
Questions & Correct Solutions
What is a price taker? Right Ans - A company that has to accept the price
that the market sets for a good. They have no influence over setting the price.
What is a price maker? Right Ans - a firm possessing the power to set the
price within the market. They still need to track all costs in order to make sure
they are making an adequate return.
What is the major purpose and use of job order costing?
a. To create a system that tracks both manufacturing and period costs and
assigns both to products
b. To create a system in which manufacturing costs are tracked by period
instead of by products
c. To create a system in which manufacturing costs are accumulated by
separate product orders or batches
d. To create a system that is exclusively used by price makers and not by price
takers Right Ans - c.
Which statement is true?
a. Having accurate product or service cost information is important for both
price takers and price makers.
b. Having accurate product or service cost information is important for price
takers, but not price makers.
c. Having accurate produce or service cost information is not important for
either price takers or price makers.
d. Having accurate product or service cost information is important for price
makers, but not price takers. Right Ans - a.
,Two competitors exist in the same industry. The first company has accurate
product cost information while the second company does not.
What is the reason behind why the first company is more successful than the
second?
a. With accurate job cost information, the first company can undercut the
second company's prices, thus driving the second company out of business.
b. With accurate job cost information, the first company can set prices that
guarantee making a profit, can understand which costs need to be worked on,
and can determine which actions can be taken to make the company more
efficient and profitable.
c. With accurate job cost information, the first company can pay higher wages
to employees, thus motivating them more than the employees of the second
company.
d. With accurate job cost information, the first company can set prices higher
than the second company, thus earning higher profits. Right Ans - b.
Job order costing is appropriate when which two conditions exist?
a. Products produced are all the same, and the manufacturing processes used
to produce them are the same.
b. Products produced are distinct from each other, and the manufacturing
processes used are different for different products.
c. Products produced are distinct, but the manufacturing processes used are
the same for different products.
d. Products produced are all the same, but the manufacturing processes used
to produce them are different for different products. Right Ans - b.
Why is having accurate product cost information important?
a. So manufacturers can charge a price based on costs and a reasonable
markup
,b. So companies can minimize the profits they are earning
c. So manufacturers can charge a price based on estimated product costs, not
including a reasonable markup
d. So companies can grow faster than all competitors in their industry
Right Ans - a.
Which type of company should use job order costing?
a. Air filter manufacturer
b. Soda bottler
c. Paper towel manufacturer
d. Commercial aircraft manufacturer Right Ans - d.
What is a condition to using job order costing?
a. Tracking total direct materials for a given period of time
b. Having no manufacturing overhead assigned to the product cost
c. Tracking total direct labor costs for a period of time
d. Identifying each specific job or product manufactured Right Ans - d.
Which costs should be assigned to each product under a job order costing
system?
a. Direct materials, direct labor, and manufacturing overhead
b. Direct labor, manufacturing overhead, and administrative expenses
c. Direct materials, direct labor, and administrative expenses
d. Manufacturing overhead, administrative expenses, and depreciation of
office buildings Right Ans - a.
Which company should use a job ordering costing system?
a. Manufacturer of custom furniture
b. Manufacturer of paint
c. Food processing plant
d. Loan processing firm Right Ans - a.
, The profitability of each separate job or product can only be tracked using
which product costing system?
a. Process costing
b. Average unit costing
c. Profitability costing
d. Job order costing Right Ans - d.
In completing its job order costing journal entries, ABC Company's
accountants made a credit entry to finished goods inventory.
When is this entry made?
a. When work-in-process inventory is transferred to finished goods inventory
b. When finished goods inventory is sold
c. When the cost of goods manufactured is being calculated
d. When manufacturing overhead costs are applied to products being made
Right Ans - b.
Which account are the costs of the raw materials, direct labor, and
miscellaneous manufacturing overhead transferred to when the product is
being manufactured?
a. Finished goods inventory
b. Cost of goods sold
c. Work-in-process inventory
d. Direct materials Right Ans - c.
When manufacturing is completed on specific products, their costs are
transferred to which account?
a. Cost of goods sold
b. Work-in-process inventory
c. Finished goods inventory
d. Direct materials Right Ans - c.
The cost of which items should be included as a manufacturing overhead cost?
a. The wages of employees who work on production lines
b. The raw materials used in the finishing department
Questions & Correct Solutions
What is a price taker? Right Ans - A company that has to accept the price
that the market sets for a good. They have no influence over setting the price.
What is a price maker? Right Ans - a firm possessing the power to set the
price within the market. They still need to track all costs in order to make sure
they are making an adequate return.
What is the major purpose and use of job order costing?
a. To create a system that tracks both manufacturing and period costs and
assigns both to products
b. To create a system in which manufacturing costs are tracked by period
instead of by products
c. To create a system in which manufacturing costs are accumulated by
separate product orders or batches
d. To create a system that is exclusively used by price makers and not by price
takers Right Ans - c.
Which statement is true?
a. Having accurate product or service cost information is important for both
price takers and price makers.
b. Having accurate product or service cost information is important for price
takers, but not price makers.
c. Having accurate produce or service cost information is not important for
either price takers or price makers.
d. Having accurate product or service cost information is important for price
makers, but not price takers. Right Ans - a.
,Two competitors exist in the same industry. The first company has accurate
product cost information while the second company does not.
What is the reason behind why the first company is more successful than the
second?
a. With accurate job cost information, the first company can undercut the
second company's prices, thus driving the second company out of business.
b. With accurate job cost information, the first company can set prices that
guarantee making a profit, can understand which costs need to be worked on,
and can determine which actions can be taken to make the company more
efficient and profitable.
c. With accurate job cost information, the first company can pay higher wages
to employees, thus motivating them more than the employees of the second
company.
d. With accurate job cost information, the first company can set prices higher
than the second company, thus earning higher profits. Right Ans - b.
Job order costing is appropriate when which two conditions exist?
a. Products produced are all the same, and the manufacturing processes used
to produce them are the same.
b. Products produced are distinct from each other, and the manufacturing
processes used are different for different products.
c. Products produced are distinct, but the manufacturing processes used are
the same for different products.
d. Products produced are all the same, but the manufacturing processes used
to produce them are different for different products. Right Ans - b.
Why is having accurate product cost information important?
a. So manufacturers can charge a price based on costs and a reasonable
markup
,b. So companies can minimize the profits they are earning
c. So manufacturers can charge a price based on estimated product costs, not
including a reasonable markup
d. So companies can grow faster than all competitors in their industry
Right Ans - a.
Which type of company should use job order costing?
a. Air filter manufacturer
b. Soda bottler
c. Paper towel manufacturer
d. Commercial aircraft manufacturer Right Ans - d.
What is a condition to using job order costing?
a. Tracking total direct materials for a given period of time
b. Having no manufacturing overhead assigned to the product cost
c. Tracking total direct labor costs for a period of time
d. Identifying each specific job or product manufactured Right Ans - d.
Which costs should be assigned to each product under a job order costing
system?
a. Direct materials, direct labor, and manufacturing overhead
b. Direct labor, manufacturing overhead, and administrative expenses
c. Direct materials, direct labor, and administrative expenses
d. Manufacturing overhead, administrative expenses, and depreciation of
office buildings Right Ans - a.
Which company should use a job ordering costing system?
a. Manufacturer of custom furniture
b. Manufacturer of paint
c. Food processing plant
d. Loan processing firm Right Ans - a.
, The profitability of each separate job or product can only be tracked using
which product costing system?
a. Process costing
b. Average unit costing
c. Profitability costing
d. Job order costing Right Ans - d.
In completing its job order costing journal entries, ABC Company's
accountants made a credit entry to finished goods inventory.
When is this entry made?
a. When work-in-process inventory is transferred to finished goods inventory
b. When finished goods inventory is sold
c. When the cost of goods manufactured is being calculated
d. When manufacturing overhead costs are applied to products being made
Right Ans - b.
Which account are the costs of the raw materials, direct labor, and
miscellaneous manufacturing overhead transferred to when the product is
being manufactured?
a. Finished goods inventory
b. Cost of goods sold
c. Work-in-process inventory
d. Direct materials Right Ans - c.
When manufacturing is completed on specific products, their costs are
transferred to which account?
a. Cost of goods sold
b. Work-in-process inventory
c. Finished goods inventory
d. Direct materials Right Ans - c.
The cost of which items should be included as a manufacturing overhead cost?
a. The wages of employees who work on production lines
b. The raw materials used in the finishing department
