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

2. Which two items on an income statement result in decreased net income if they are increased?
Choose 2 answers.

A) Cost of goods sold
B) Revenues
C) Gains
D) Interest expense

3. 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 to avoid making mistakes because the method reveals indirect costs
D) Easy for a novice to decipher operating cash flow information

4. Which two procedures do external auditors use to gain confidence in the quality of a company's financial reporting processes?
Choose 2 answers.

A) They perform a marketing analysis to determine demand for the company's products or services
B) They poll the public regarding the company's external image
C) They conduct a customer satisfaction survey
D) They obtain confirmations from third parties the company does business with
E) They examine records to support balances and transactions

5. Which ratio provides a measure of how well a company turns sales into profits?

A) Return on expenses
B) Return on profit
C) Return on costs
D) Return on sales

Solutions: