WGU UFC 1 Managerial Accounting Pre-assessment

Which Feature of managerial accounting improves a company's ability to plan and control operations?

It generates detailed information on product cost.

Which statement describes period costs?

They flow directly to the current income statement as expenses.

A company has the following costs associated with a job:
Direct materials: $400
Direct labor: $450
Work in process: $950
Revenue from job: $1,450
What is the amount of overhead applied to this job?


Management wants to assess how many units must be sold to earn a profit.
The most useful analysis will separate costs into which categories?

Fixed and variable.

A manufacturing company budgeted for $1,240,000 in manufacturing overhead and expected 400,000 direct labor hours. Actual overhead was $1,200,000, and actual direct labor hours were 390,000.
Was manufacturing overhead over - or under-applied and by how mu

Over-applied by $9,000.

Cost of goods manufactured equals $87,000 for the year. Finished goods inventory is $10,000 at the beginning of the year and $4,000 at the end of the year. Beginning and ending work in process are $4,000 and $5,000, respectively.
How much is cost of goods


The following information relates to a company's production activities for the month of October:
Estimated cost of direct labor: $18,500
Estimated cost of manufacturing overhead: $22,000
Estimated direct labor hours: 900
Actual cost of direct labor: $19,0

$24.44 per direct labor hour.

The following amounts were reported by a company before adjusting its over-applied manufacturing overhead of $48,000:
Cost of goods sold: $730,000
Applied overhead: $368,000
Actual overhead: $320,000
What is the company's adjusted cost of goods sold?


The manufacturing operations of a company had the following balances for the year:
Beginning raw materials: $84,000
Beginning work in process: $45,000
Beginning finished goods: $28,000
Ending raw materials: $91,000
Ending work in process: $59,000
Ending f


A company provides the following data for its process costing system:
Equivalent units for materials: 10,000
Material costs for units in beginning inventory: $20,000
Material costs for units started during the period: $80,000
Conversion costs for units in


What is the emphasis of activity-based costing systems?

Individual activities.

Which common activity cost pool is driven by number of units produced?

Units assembled.

A company uses an activity-based costing system composed of three processes: tooling, processing, and resources.
The company has the following firm-wide totals from its costing system:
Tooling driver quantity: 25 setups
Tooling costs per pool: $500,000


What are the relevant costs in the managerial decision-making process?

Opportunity costs.

The accountant of a local retailer prepared the following income statement for this month:
Sales revenue $600,000
Cost of goods sold $250,000
Gross margin $350,000
Less operating expenses
Selling expense $73,000
Administrative expense $65,000 $138,000


A merchandise company reported the following results for the year:
Number of units sold: 1,000
Selling price per unit: $400
Variable manufacturing costs per unit: $120
Variable selling costs per unit: $90
Total fixed selling costs: $10,000
Variable admini


A company sells a product for $18 per unit. The variable cost is $6 per unit. The company has fixed costs of $42,000.
How many units must it sell in order to break even?


A company reports the following annual information for a product:
Sales price: $48 per unit
Variable costs: $15 per unit
Fixed costs: $150,000
Units produced and sold: 30,000 units
If the sales price is increased to $50 per unit and nothing else changes,


A company reports the following annual information for a product:
Sales price: $48 per unit
Variable costs: $15 per unit
Fixed costs: $150,000
Units produced and sold: 30,000
If fixed costs decreased to $120,000, what is the break-even point in units? (Ro

3,637 units.

Why does direct labor cost affect the make-or-buy decision?

It is a variable cost.

Last year, a company spent $25 per unit to make widgets. This year, however, the cost has increased to $40 per unit. The company has recently learned it can buy widgets for $38 per unit.
Which differential cost should be considered for this make-or-buy de

$2 per unit.

A company manufactures bird feeders, which they normally sell for $30 each. The company compiles the following information relating to the production of the bird feeders:
Plant capacity: 280,000 feeders
Current production level: 200,000 feeders
Direct mat


It costs a company $6 of variable costs to produce one flag, which normally sells for $20. A customer offers to purchase 30,000 flags at $10 each. The company would incur special shipping costs of $1 per flag if the order were accepted. The company has su


A company is deciding whether equipment currently in use should be replaced by new equipment.
Which information is relevant to this decision?

The cost of the new equipment.

A company is considering whether to eliminate a segment and has compiled the following information:
Total Segment Proposed
(existing) (drop) (remaining)
Sales ($210/unit) $26.50 $13,125 $13,125
Variable costs $10,500 $6,300 $4,200
Contribution margin $15,

Keep the segment since eliminating it will result in a $4,575 reduction in net income compared to the existing business.

A company has the capacity to produce 20,000 units of its product per year. It is currently only producing 13,000 units per year, with a sell price of $70 per unit. A customer has placed a special order for 6,500 units at $62 per unit. The incremental cos

Yes, because the incremental contribution margin would be $21,000.

A company has inventory that cost $50,000. Its scrap value is $65,000. The inventory could be sold for $150,000 if manufactured further at an additional cost of $80,000.
What should this company do?

Manufacture further and sell it for $150,000.

A company produces a product that currently costs $8 in variable costs and $2 in fixed costs. It sells the product for $14. If processed further, the company will spend an additional $6 in variable costs and $2 in fixed costs. Each unit would then be sold

Incremental profit will be $2/unit.

How can a reliable budgeting system be identified?

It provides for effective planning and control.

A company has the following budgeted sales:
July: $200,000
August: $300,000
September: $250,000
20% of the sales are for cash, and 80% are on credit. 25% of the credit sales are collected in the month of sale, and 75% are collected the next month.
What ar


The budget committee of a manufacturer has just completed its sales budget.
Which budget should be prepared next?

Production budget.

Which budget is the basis for all other budgets created in the budgeting process?

Sales budget.

The following is a list of budgets in the master budget:
Balance sheet
Direct material
Direct labor
Ending inventory
Income statement
Manufacturing overhead
General & administrative expense
Which type of budget includes depreciation

Manufacturing overhead budget.

Which budget is designed to evaluate changes in revenue and costs?

Flexible budget.

A budget committee for a merchandising firm has just completed its sales budget. The committee knows its budgeted beginning and ending inventory.
Which additional item form the sales budget is needed to prepare the merchandise purchases budget?

Expected Sales.

Which budget uses the results calculated in the direct labor budget?

Cash budget.

Why is the sales budget important?

It drives multiple calculations in other budgets.

Where on a flexible budget would a user look for depreciation expenses?

Fixed costs.

A company's budgeted costs for 60,000 units are as follows:
Fixed manufacturing costs: $30,000
Variable manufacturing costs: $15.00/unit
The company produced 50,000 units.
How much is the budgeted total manufacturing cost?


A company's planned activity level is 200,000 direct labor hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Indirect materials: $174,000
Indirect labor: $180,000
Factory supplies: $46,000


A static budget, based upon production of 10,000 units, showed an estimated direct labor budget of $30,000 and depreciation budget of $20,000. Direct labor costs are fully variable. The actual direct labor and depreciation costs were $28,000 and $19,000 f


Paradigm Toys Flexible Budget Performance Report:
Budget Actual Difference
Production in units 18,000 18,000
Direct labor hours: 18,000 18,200 200 (U)
Direct labor costs: $360,000 $354,900 $5,100 (F)
Quantity: 9,000 9,300 300

The company used workers with less experience.

Paradigm Toys Flexible Budget Performance Report:
Budget Actual Difference
Production in units 18,000 18,000
Direct labor hours: 18,000 18,200 200 (U)
Direct labor costs: $360,000 $354,900 $5,100 (F)
Quantity: 9,000 9,300 300

The company used lower quality direct materials.

Jaunty Coffee Company Flexible Budget Performance Report
Budget Actual Difference
Production in units 32,000 32,000
Direct labor hours: 12,000 11,500 500 F
Direct labor costs: $180,000 $168,000 $12,000 F
Quantity: 24,000 23,2

The company's workers were more productive.

A company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company made 4,200 units. Total yards used for production were 3,960.
What is the material quantity variance?

$19,440 favorable.

A company provides the following data for material costs:
Standard cost per unit: 3 pounds at $2 per unit
Actual cost per unit: 2.5 pounds at $3 per unit
During the month, 5,000 pounds of raw materials were purchased.
What is the direct material price var

$5,000 unfavorable.

A company notices that it has significant unused capacity and a rapidly rising fixed overhead volume variance.
Which action should management take?

Consolidate production facilities.

A company manufactures snowboards. The company has an unfavorable direct materials price variance that is rising considerably faster than its competitors.
Which action should management take?

Source new suppliers.

Which inventory technique emphasizes lower inventory balances?

Just-in-time manufacturing.

A company is concerned about the working conditions in their suppliers' factories in the developing world.
Which current trend in managerial accounting would support the consideration of working conditions of employees?

Triple bottom line.

A large social media firm is considering how to use "big data" collected about its users.
Which current trend in managerial accounting will inform how this firm makes decisions about this?

Accounting ethics standards.

A large international energy company has determined that it can achieve significantly lower costs by reducing expenditures on safety and emissions control.
Which trend in managerial accounting will help inform this company's decision?

Corporate social responsibility.

A small hair salon is evaluating its performance using the balanced scorecard method.
Which metric will appropriately measure the performance of the company from the customer perspective?

Percentage of appointments that are kept.

An automobile manufacturer evaluates its performance using the balanced scorecard approach.
Which metric appropriately measures company performance from the internal process perspective?

Number of warranty repairs.

A business using the balanced scorecard technique has chosen to increase their emphasis on learning and growth.
Where should they invest their funding?

Creating management training programs.