Solution Manual for Managerial Accounting,
ii ii ii ii
18th Edition ii
By Ray Garrison, Eric Noreen and Peter Brewer
ii ii ii ii ii ii ii
Verified Chapter's 1 - 16 | Complete
ii ii ii ii ii ii
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts Chapter Two:
Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting Chapter
Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management Chapter
Seven: Activity-Based Costing: A Tool to Aid Decision Making Chapter Eight: Master
Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis Chapter Ten:
Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems Chapter
Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making Chapter
Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows Chapter
Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting and Cost Concepts
Questions
which it is incurred.
1-1 The three major types of product costs in
a manufacturing company are direct materials,
direct labor, and manufacturing overhead.
1-2
a. Direct materials are an integral part of a
finished product and their costs can be conveniently
traced to it.
b. Indirect materials are generally small items of
material such as glue and nails. They may be an
integral part of a finished product but their costs can be
traced to the product only at great cost or
inconvenience.
c. Direct labor consists of labor costs that
can be easily traced to particular products.
Direct labor is also called ―touch labor.ǁ
d. Indirect labor consists of the labor costs of
janitors, supervisors, materials handlers, and other
factory workers that cannot be conveniently traced to
particular products. These labor costs are incurred to
support production, but the workers involved do not
directly work on the product.
e. Manufacturing overhead includes all
manufacturing costs except direct materials and
direct labor. Consequently, manufacturing overhead
includes indirect materials and indirect labor as well
as other manufacturing costs.
1-3 A product cost is any cost involved in
purchasing or manufacturing goods. In the case of
manufactured goods, these costs consist of direct
materials, direct labor, and manufacturing overhead. A
period cost is a cost that is taken directly to the
income statement as an expense in the period in
, 1-4
a. Variable cost: The variable cost per unit is
constant, but total variable cost changes in
direct proportion to changes in volume.
b. Fixed cost: The total fixed cost is constant
within the relevant range. The average fixed
cost per unit varies inversely with changes
in volume.
c. Mixed cost: A mixed cost contains both
variable and fixed cost elements.
1-5
a. Unit fixed costs decrease as the activity level
increases.
b. Unit variable costs remain constant as the
activity level increases.
c. Total fixed costs remain constant as the
activity level increases.
d. Total variable costs increase as the activity
level increases.
1-6
a. Cost behavior: Cost behavior refers to the way
in which costs change in response to changes
in a measure of activity such as sales volume,
production volume, or orders processed.
b. Relevant range: The relevant range is the
range of activity within which assumptions
about variable and fixed cost behavior are
valid.
1-7 An activity base is a measure of
whatever causes the incurrence of a variable cost.
Examples of activity bases include units produced,
units sold, letters typed, beds in a hospital, meals
served in a cafe, service calls made,
etc.
1-8 The linear assumption is reasonably valid
providing that the cost formula is used only within the
relevant range.
ii ii ii ii
18th Edition ii
By Ray Garrison, Eric Noreen and Peter Brewer
ii ii ii ii ii ii ii
Verified Chapter's 1 - 16 | Complete
ii ii ii ii ii ii
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts Chapter Two:
Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting Chapter
Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management Chapter
Seven: Activity-Based Costing: A Tool to Aid Decision Making Chapter Eight: Master
Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis Chapter Ten:
Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems Chapter
Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making Chapter
Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows Chapter
Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting and Cost Concepts
Questions
which it is incurred.
1-1 The three major types of product costs in
a manufacturing company are direct materials,
direct labor, and manufacturing overhead.
1-2
a. Direct materials are an integral part of a
finished product and their costs can be conveniently
traced to it.
b. Indirect materials are generally small items of
material such as glue and nails. They may be an
integral part of a finished product but their costs can be
traced to the product only at great cost or
inconvenience.
c. Direct labor consists of labor costs that
can be easily traced to particular products.
Direct labor is also called ―touch labor.ǁ
d. Indirect labor consists of the labor costs of
janitors, supervisors, materials handlers, and other
factory workers that cannot be conveniently traced to
particular products. These labor costs are incurred to
support production, but the workers involved do not
directly work on the product.
e. Manufacturing overhead includes all
manufacturing costs except direct materials and
direct labor. Consequently, manufacturing overhead
includes indirect materials and indirect labor as well
as other manufacturing costs.
1-3 A product cost is any cost involved in
purchasing or manufacturing goods. In the case of
manufactured goods, these costs consist of direct
materials, direct labor, and manufacturing overhead. A
period cost is a cost that is taken directly to the
income statement as an expense in the period in
, 1-4
a. Variable cost: The variable cost per unit is
constant, but total variable cost changes in
direct proportion to changes in volume.
b. Fixed cost: The total fixed cost is constant
within the relevant range. The average fixed
cost per unit varies inversely with changes
in volume.
c. Mixed cost: A mixed cost contains both
variable and fixed cost elements.
1-5
a. Unit fixed costs decrease as the activity level
increases.
b. Unit variable costs remain constant as the
activity level increases.
c. Total fixed costs remain constant as the
activity level increases.
d. Total variable costs increase as the activity
level increases.
1-6
a. Cost behavior: Cost behavior refers to the way
in which costs change in response to changes
in a measure of activity such as sales volume,
production volume, or orders processed.
b. Relevant range: The relevant range is the
range of activity within which assumptions
about variable and fixed cost behavior are
valid.
1-7 An activity base is a measure of
whatever causes the incurrence of a variable cost.
Examples of activity bases include units produced,
units sold, letters typed, beds in a hospital, meals
served in a cafe, service calls made,
etc.
1-8 The linear assumption is reasonably valid
providing that the cost formula is used only within the
relevant range.
