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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. A company has three product lines and has historically used the traditional costing system to allocate overhead costs to each product line. Due to significant differences in the production processes for the three product lines, the company implemented an activity-based costing study and identified the activity-based cost for each product, as shown in the following table.
Product A
Product B
Product C
Traditional cost per unit
$558
$1,375
$1,211
Activity-based cost per unit
$675
$1,585
$1,350
Selling price per unit
$650
$1,450
$1,300
What do these data points reveal about the selling price of this company's products?

A) The selling price should increase for all three products
B) The selling price for only Products A and C should increase
C) No change should be made to the selling price
D) The selling price for only Product B should increase

2. What are two examples of product costs?
Choose 2 answers.

A) Direct labor
B) Period expenses
C) Raw materials
D) Selling and administrative expenses

3. During the year, a company purchased goods on a credit basis for its supplies of $750.
What would be the impact on the accounting equation and financial statement?

A) Increase in assets by $750 and decrease in liability by $750
B) Decrease in assets by $750 and decrease in liability by $750
C) Decrease in assets by $750 and increase in liability by $750
D) Increase in assets by $750 and increase in liability by $750

4. A company plans to purchase inventory for the second half of a year as follows:
July = $100,000
August = $75,000
September = $225,000
October = $125,000
November = $250,000
December = $30,000
The company usually pays 50% of inventory purchases in the month of purchase, 35% in the following month, and 15% in the second month.
What are the forecasted October cash payments based on this information?

A) $18,750
B) $152,500
C) $62,500
D) $78,750

5. What is an advantage of the indirect method of the cash flow statement?

A) Easy to reconcile between net income and cash flows
B) Easy to highlight the difference between direct and indirect costs
C) Easy for a novice to decipher operating cash flow information
D) Easy to avoid making mistakes because the method reveals indirect costs

Solutions: