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WGU Accounting for Decision Makers C213 VAC2 Sample Questions:

1. Given the following information:
Pairs of shoes expected to be produced = 1,950,000
Pairs of shoes produced = 2,500,000
Overhead rate = $0.75
What is the amount of applied overhead?

A) $412,500
B) $1,462,500
C) $550,000
D) $1,875,000

2. What does it mean if a company has a debt ratio of 101.5%?

A) The company has 1.5% more total liabilities than gross sales
B) The company has 1.5% more total liabilities than total assets
C) The company has 1.5% more total liabilities than net income
D) The company has 1.5% more current liabilities than current assets

3. A company presently uses traditional volume-based costing to allocate overhead to its products.
The following table provides information on two of the company's products:
Product A
Product B
Selling price
$8
$12
Direct material
$2
$3
Direct labor
$1
$2
Applied overhead
$3
$4
Gross margin
$2
$3
Overhead that would be applied to Product A would increase to $8 per unit after identifying cost pools and cost drivers, and the overhead applied to Product B would drop to $2 per unit .
How would this change in the way overhead is allocated affect the selling price of both products?

A) The price of neither product would change
B) The price of Product A would decrease, and the price of Product B would increase
C) The price of Product A would increase, and the price of Product B would decrease
D) The price of Product A would increase, and the price of Product B would increase

4. 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) -$55,000
B) -$325,000
C) -$280,000
D) -$310,000

5. Which two examples represent financial statement errors?
Choose 2 answers.

A) An accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability
B) An accounting employee overpays a supplier and receives a portion of the excess as a kickback
C) An outside auditor disagrees with the amount reported as an allowance for uncollectible accounts receivable
D) An accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned

Solutions: