Solution Manual for Managerial Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
h h
ChapterhOne:hManagerialhAccountinghandhCosthConcepts
ChapterhTwo:hJob-OrderhCosting:hCalculatinghUnithProducthCosts
ChapterhThree:hJob-OrderhCosting:hCosthFlowshandhExternalhReporting
ChapterhFour:hProcesshCosting
ChapterhFive:hCost-Volume-ProfithRelationships
ChapterhSix:hVariablehCostinghandhSegmenthReporting:hToolshforhManagement
ChapterhSeven:hActivity-BasedhCosting:hAhToolhtohAidhDecisionhMaking
ChapterhEight:hMasterhBudgeting
ChapterhNine:hFlexiblehBudgetshandhPerformancehAnalysis
ChapterhTen:hStandardhCostshandhVariances
ChapterhEleven:hResponsibilityhAccountinghSystems
ChapterhTwelve:hStrategichPerformancehMeasurement
ChapterhThirteen:hDifferentialhAnalysis:hThehKeyhtohDecisionhMaking
ChapterhFourteen:hCapitalhBudgetinghDecisions
ChapterhFifteen:hStatementhofhCashhFlows
ChapterhSixteen:hFinancialhStatementhAnalysis
,Chapter 1 h
Managerial Accounting and Cost Concepts
h h h h
Questions
1-1 Thehthreehmajorhtypeshofhproducthcostsh 1-4
inhahmanufacturinghcompanyharehdirecthmaterial a. Variablehcost:hThehvariablehcosthperhunithish
s,hdirecthlabor,handhmanufacturinghoverhead. constant,hbuthtotalhvariablehcosthchangeshinh
directhproportionhtohchangeshinhvolume.
1-2 b. Fixedhcost:hThehtotalhfixedhcosthishconstanthwi
a. Directhmaterialsharehanhintegralhparthofhah thinhthehrelevanthrange.hThehaveragehfixedhco
finishedhproducthandhtheirhcostshcanhbehconveni sthperhunithvarieshinverselyhwithhchangesh inhv
entlyhtracedhtohit. olume.
b. Indirecthmaterialsharehgenerallyhsmallhitem c. Mixedhcost:hAhmixedhcosthcontainshbothh
shofhmaterialhsuchhashgluehandhnails.hTheyhmayhb variablehandhfixedhcosthelements.
ehanhintegralhparthofhahfinishedhproducthbuththeirhc
ostshcanhbehtracedhtohthehproducthonlyhathgreathc 1-5
osthorhinconvenience. a. Unithfixedhcostshdecreasehashthehactivityhlevelh
c. Directhlaborhconsistshofhlaborhcostshthath increases.
canhbeheasilyhtracedhtohparticularhproducts. b. Unithvariablehcostshremainhconstanthashtheh
Directhlaborhishalsohcalledh―touchhlabor.‖ activityhlevelhincreases.
d. Indirecthlaborhconsistshofhthehlaborhcostsh c. Totalhfixedhcostshremainhconstanthashtheh
ofhjanitors,hsupervisors,hmaterialshhandlers,handh activityhlevelhincreases.
otherhfactoryhworkershthathcannothbehconvenien d. Totalhvariablehcostshincreasehashthehactivityh
tlyhtracedhtohparticularhproducts.hThesehlaborhco levelhincreases.
stsharehincurredhtohsupporthproduction,hbuththeh
workershinvolvedhdohnothdirectlyhworkhonhthehpr 1-6
oduct. a. Costhbehavior:hCosthbehaviorhrefershtohtheh
e. Manufacturinghoverheadhincludeshallhman wayhinhwhichhcostshchangehinhresponsehtohc
ufacturinghcostshexcepthdirecthmaterialshandhdire hangeshinhahmeasurehofhactivityhsuchhashsal
cthlabor.hConsequently,hmanufacturinghoverhead eshvolume,hproductionhvolume,horhordershpr
hincludeshindirecthmaterialshandhindirecthlaborhash ocessed.
wellhashotherhmanufacturinghcosts. b. Relevanthrange:hThehrelevanthrangehishtheh
rangehofhactivityhwithinhwhichhassumptionsh
1-3 abouthvariablehandhfixedhcosthbehaviorhareh
Ahproducthcosthishanyhcosthinvolvedhinhpu valid.
rchasinghorhmanufacturinghgoods.hInhthehcasehofh
manufacturedhgoods,hthesehcostshconsisthofhdire 1-7 Anhactivityhbasehishahmeasurehofhwha
cthmaterials,hdirecthlabor,handhmanufacturinghove teverhcauseshthehincurrencehofhahvariablehcost
rhead.hAhperiodhcosthishahcosththathishtakenhdirectl .hExampleshofhactivityhbaseshincludehunitshpro
yhtohthehincomehstatementhashanhexpensehinhtheh duced,hunitshsold,hlettershtyped,hbedshinhahhos
periodhinhwhichhithishincurred. pital,hmealshservedhinhahcafe,hservicehcallshma
de,hetc.
1-8 Thehlinearhassumptionhishreasonablyhvali
, dhprovidinghthaththehcosthformulahishusedhonlyhwi
thinhthehrelevanthrange.
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
h h
ChapterhOne:hManagerialhAccountinghandhCosthConcepts
ChapterhTwo:hJob-OrderhCosting:hCalculatinghUnithProducthCosts
ChapterhThree:hJob-OrderhCosting:hCosthFlowshandhExternalhReporting
ChapterhFour:hProcesshCosting
ChapterhFive:hCost-Volume-ProfithRelationships
ChapterhSix:hVariablehCostinghandhSegmenthReporting:hToolshforhManagement
ChapterhSeven:hActivity-BasedhCosting:hAhToolhtohAidhDecisionhMaking
ChapterhEight:hMasterhBudgeting
ChapterhNine:hFlexiblehBudgetshandhPerformancehAnalysis
ChapterhTen:hStandardhCostshandhVariances
ChapterhEleven:hResponsibilityhAccountinghSystems
ChapterhTwelve:hStrategichPerformancehMeasurement
ChapterhThirteen:hDifferentialhAnalysis:hThehKeyhtohDecisionhMaking
ChapterhFourteen:hCapitalhBudgetinghDecisions
ChapterhFifteen:hStatementhofhCashhFlows
ChapterhSixteen:hFinancialhStatementhAnalysis
,Chapter 1 h
Managerial Accounting and Cost Concepts
h h h h
Questions
1-1 Thehthreehmajorhtypeshofhproducthcostsh 1-4
inhahmanufacturinghcompanyharehdirecthmaterial a. Variablehcost:hThehvariablehcosthperhunithish
s,hdirecthlabor,handhmanufacturinghoverhead. constant,hbuthtotalhvariablehcosthchangeshinh
directhproportionhtohchangeshinhvolume.
1-2 b. Fixedhcost:hThehtotalhfixedhcosthishconstanthwi
a. Directhmaterialsharehanhintegralhparthofhah thinhthehrelevanthrange.hThehaveragehfixedhco
finishedhproducthandhtheirhcostshcanhbehconveni sthperhunithvarieshinverselyhwithhchangesh inhv
entlyhtracedhtohit. olume.
b. Indirecthmaterialsharehgenerallyhsmallhitem c. Mixedhcost:hAhmixedhcosthcontainshbothh
shofhmaterialhsuchhashgluehandhnails.hTheyhmayhb variablehandhfixedhcosthelements.
ehanhintegralhparthofhahfinishedhproducthbuththeirhc
ostshcanhbehtracedhtohthehproducthonlyhathgreathc 1-5
osthorhinconvenience. a. Unithfixedhcostshdecreasehashthehactivityhlevelh
c. Directhlaborhconsistshofhlaborhcostshthath increases.
canhbeheasilyhtracedhtohparticularhproducts. b. Unithvariablehcostshremainhconstanthashtheh
Directhlaborhishalsohcalledh―touchhlabor.‖ activityhlevelhincreases.
d. Indirecthlaborhconsistshofhthehlaborhcostsh c. Totalhfixedhcostshremainhconstanthashtheh
ofhjanitors,hsupervisors,hmaterialshhandlers,handh activityhlevelhincreases.
otherhfactoryhworkershthathcannothbehconvenien d. Totalhvariablehcostshincreasehashthehactivityh
tlyhtracedhtohparticularhproducts.hThesehlaborhco levelhincreases.
stsharehincurredhtohsupporthproduction,hbuththeh
workershinvolvedhdohnothdirectlyhworkhonhthehpr 1-6
oduct. a. Costhbehavior:hCosthbehaviorhrefershtohtheh
e. Manufacturinghoverheadhincludeshallhman wayhinhwhichhcostshchangehinhresponsehtohc
ufacturinghcostshexcepthdirecthmaterialshandhdire hangeshinhahmeasurehofhactivityhsuchhashsal
cthlabor.hConsequently,hmanufacturinghoverhead eshvolume,hproductionhvolume,horhordershpr
hincludeshindirecthmaterialshandhindirecthlaborhash ocessed.
wellhashotherhmanufacturinghcosts. b. Relevanthrange:hThehrelevanthrangehishtheh
rangehofhactivityhwithinhwhichhassumptionsh
1-3 abouthvariablehandhfixedhcosthbehaviorhareh
Ahproducthcosthishanyhcosthinvolvedhinhpu valid.
rchasinghorhmanufacturinghgoods.hInhthehcasehofh
manufacturedhgoods,hthesehcostshconsisthofhdire 1-7 Anhactivityhbasehishahmeasurehofhwha
cthmaterials,hdirecthlabor,handhmanufacturinghove teverhcauseshthehincurrencehofhahvariablehcost
rhead.hAhperiodhcosthishahcosththathishtakenhdirectl .hExampleshofhactivityhbaseshincludehunitshpro
yhtohthehincomehstatementhashanhexpensehinhtheh duced,hunitshsold,hlettershtyped,hbedshinhahhos
periodhinhwhichhithishincurred. pital,hmealshservedhinhahcafe,hservicehcallshma
de,hetc.
1-8 Thehlinearhassumptionhishreasonablyhvali
, dhprovidinghthaththehcosthformulahishusedhonlyhwi
thinhthehrelevanthrange.
