WGU C213 Object Assessment Accounting for Decision Makers 2023/ 2024 Exam |Actual Questions and Verified Answers with rationales guaranteed a+
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Course
WGU C213
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WGU C213
WGU C213 Object Assessment Accounting for Decision Makers
2023/ 2024 Exam |Actual Questions and Verified Answers
with rationales guaranteed a+
1. Which of the following is the primary objective of financial accounting?
A) To provide information for internal decision-making
B) To report the f...
WGU C213 Object
Assessment Accounting for
Decision Makers 2023/
2024 Exam |Actual
Questions and Verified
Answers with rationales
guaranteed a+
,1|Page
WGU C213 Object Assessment Accounting for Decision Makers
2023/ 2024 Exam |Actual Questions and Verified Answers
with rationales guaranteed a+
1. Which of the following is the primary objective of financial accounting?
A) To provide information for internal decision-making
B) To report the financial performance and position of the company to external stakeholders
C) To allocate costs to products
D) To determine the tax obligations of the company
Answer: B) To report the financial performance and position of the company to external
stakeholders
Rationale:
Financial accounting focuses on preparing financial statements (income statement, balance sheet,
cash flow statement) for external users such as investors, creditors, and regulators, to assess the
company's financial health.
2. A company uses absorption costing. Which of the following is included in the
cost of goods manufactured?
A) Direct materials used in production
B) Advertising expenses
C) Administrative salaries
D) Depreciation on office equipment
Answer: A) Direct materials used in production
Rationale:
Absorption costing includes all manufacturing costs (direct materials, direct labor, and both
variable and fixed manufacturing overhead) in the cost of goods manufactured. Advertising
expenses and administrative salaries are period costs and are not included in the manufacturing
costs.
3. Which of the following is considered a variable cost?
A) Rent on a factory building
B) Depreciation on machinery
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C) Direct labor costs
D) Insurance premiums
Answer: C) Direct labor costs
Rationale:
Variable costs change with the level of production or sales. Direct labor costs are variable
because they increase or decrease depending on the number of units produced. Rent,
depreciation, and insurance are generally fixed costs, as they do not vary with production levels.
4. What is the primary purpose of a cost-volume-profit (CVP) analysis?
A) To determine the break-even point and assess profit at different levels of sales
B) To calculate the cost of goods sold
C) To determine the market value of a company’s equity
D) To allocate overhead costs to products
Answer: A) To determine the break-even point and assess profit at different levels of sales
Rationale:
CVP analysis is used to understand the relationship between costs, volume, and profit. It helps
businesses determine the break-even point, the sales needed to cover costs, and the impact of
different levels of production or sales on profit.
5. A company is considering whether to discontinue a product. Which of the
following would be most relevant to the decision?
A) Sunk costs associated with the product
B) The contribution margin of the product
C) The historical development cost of the product
D) The fixed costs allocated to the product
Answer: B) The contribution margin of the product
Rationale:
The contribution margin is the amount by which a product's sales revenue exceeds its variable
costs. This is relevant for deciding whether to discontinue the product, as it shows whether the
product is covering its variable costs and contributing toward fixed costs.
6. Which of the following is true about a flexible budget?
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A) It is prepared before the period begins
B) It is based on a set level of activity and does not change
C) It adjusts for changes in the volume of activity during the period
D) It only applies to variable costs
Answer: C) It adjusts for changes in the volume of activity during the period
Rationale:
A flexible budget adjusts for changes in the level of activity. It helps companies compare actual
performance to what would be expected at the actual level of activity, making it a useful tool for
performance evaluation.
7. A company’s fixed costs are $100,000, its contribution margin per unit is $50,
and it sells each unit for $150. What is the break-even point in units?
A) 1,000 units
B) 2,000 units
C) 3,000 units
D) 5,000 units
Answer: A) 1,000 units
Rationale:
The break-even point in units is calculated by dividing fixed costs by the contribution margin per
unit:
Break-
even point (units)=Fixed CostsContribution Margin per Unit=100,00050=1,000 units\text{Break
-even point (units)} = \frac{\text{Fixed Costs}}{\text{Contribution Margin per Unit}} =
\frac{100,000}{50} = 1,000 \text{ units}Break-
even point (units)=Contribution Margin per UnitFixed Costs=50100,000=1,000 units
8. Which of the following would be an example of a sunk cost?
• The cost of raw materials already purchased for production
B) The cost of hiring new employees
C) A machine that is being replaced but cannot be sold
D) Future costs that will be incurred if a project continues
Answer: C) A machine that is being replaced but cannot be sold
Rationale:
A sunk cost is a cost that has already been incurred and cannot be recovered. The machine that is
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