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

2. Which balance sheet category reflects what a company owns that can be turned into cash or used to generate cash?

A) Liabilities
B) Assets
C) Revenues
D) Owners' equity

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

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

4. Which overhead cost is associated with batch-level activities?

A) Factory insurance
B) Property taxes
C) Product engineering wages
D) Machine setups

5. A company's statement of cash flows includes the following cash transactions.
Sales = $1,250,000
Inventory purchase = -$750,000
Property and equipment purchase = -$280,000
Interest payment on long-term debt = -$25,000
Payment of wages = -$315,000
Payment of rent = -$40,000
Borrowing long-term debt = $200,000
Payment of cash dividends = -$15,000
Repurchase of treasury stock = -$40,000
Total cash flows = -$5,000
What is the total cash flow from investing activities?

A) -$310,000
B) -$55,000
C) -$325,000
D) -$280,000

Solutions: