Solution Manual for Managerial Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
r r
ChapterrOne:rManagerialrAccountingrandrCostrConcepts
ChapterrTwo:rJob-OrderrCosting:rCalculatingrUnitrProductrCosts
ChapterrThree:rJob-OrderrCosting:rCostrFlowsrandrExternalrReporting
ChapterrFour:rProcessrCosting
ChapterrFive:rCost-Volume-ProfitrRelationships
ChapterrSix:rVariablerCostingrandrSegmentrReporting:rToolsrforrManagement
ChapterrSeven:rActivity-BasedrCosting:rArToolrtorAidrDecisionrMaking
ChapterrEight:rMasterrBudgeting
ChapterrNine:rFlexiblerBudgetsrandrPerformancerAnalysis
ChapterrTen:rStandardrCostsrandrVariances
ChapterrEleven:rResponsibilityrAccountingrSystems
ChapterrTwelve:rStrategicrPerformancerMeasurement
ChapterrThirteen:rDifferentialrAnalysis:rTherKeyrtorDecisionrMaking
ChapterrFourteen:rCapitalrBudgetingrDecisions
ChapterrFifteen:rStatementrofrCashrFlows
ChapterrSixteen:rFinancialrStatementrAnalysis
,Chapter 1 r
Managerial Accounting and Cost Concepts
r r r r
Questions
1-1 Therthreermajorrtypesrofrproductrcostsri 1-4
nrarmanufacturingrcompanyrarerdirectrmaterials a. Variablercost:rThervariablercostrperrunitrisrc
,rdirectrlabor,randrmanufacturingroverhead. onstant,rbutrtotalrvariablercostrchangesrinrdi
rectrproportionrtorchangesrinrvolume.
1-2 b. Fixedrcost:rThertotalrfixedrcostrisrconstantrwit
a. Directrmaterialsrareranrintegralrpartrofrarfi hinrtherrelevantrrange.rTheraveragerfixedrcost
nishedrproductrandrtheirrcostsrcanrberconvenien rperrunitrvariesrinverselyrwithrchangesr inrvolu
tlyrtracedrtorit. me.
b. Indirectrmaterialsrarergenerallyrsmallritem c. Mixedrcost:rArmixedrcostrcontainsrbothrv
srofrmaterialrsuchrasrgluerandrnails.rTheyrmayrber ariablerandrfixedrcostrelements.
anrintegralrpartrofrarfinishedrproductrbutrtheirrcost
srcanrbertracedrtortherproductronlyratrgreatrcostro 1-5
rrinconvenience. a. Unitrfixedrcostsrdecreaserasrtheractivityrlevelri
c. Directrlaborrconsistsrofrlaborrcostsrthatrc ncreases.
anrbereasilyrtracedrtorparticularrproducts. b. Unitrvariablercostsrremainrconstantrasrthera
Directrlaborrisralsorcalledr―touchrlabor.‖ ctivityrlevelrincreases.
d. Indirectrlaborrconsistsrofrtherlaborrcostsro c. Totalrfixedrcostsrremainrconstantrasrthera
frjanitors,rsupervisors,rmaterialsrhandlers,randrot ctivityrlevelrincreases.
herrfactoryrworkersrthatrcannotrberconvenientlyr d. Totalrvariablercostsrincreaserasrtheractivityrl
tracedrtorparticularrproducts.rTheserlaborrcostsr evelrincreases.
arerincurredrtorsupportrproduction,rbutrtherwork
ersrinvolvedrdornotrdirectlyrworkronrtherproduct. 1-6
e. Manufacturingroverheadrincludesrallrmanu a. Costrbehavior:rCostrbehaviorrrefersrtortherw
facturingrcostsrexceptrdirectrmaterialsrandrdirectrl ayrinrwhichrcostsrchangerinrresponsertorcha
abor.rConsequently,rmanufacturingroverheadrincl ngesrinrarmeasurerofractivityrsuchrasrsalesrv
udesrindirectrmaterialsrandrindirectrlaborrasrwellra olume,rproductionrvolume,rorrordersrprocess
srotherrmanufacturingrcosts. ed.
b. Relevantrrange:rTherrelevantrrangerisrtherr
1-3 angerofractivityrwithinrwhichrassumptionsra
Arproductrcostrisranyrcostrinvolvedrinrpur boutrvariablerandrfixedrcostrbehaviorrarerva
chasingrorrmanufacturingrgoods.rInrthercaserofrm lid.
anufacturedrgoods,rthesercostsrconsistrofrdirectr
materials,rdirectrlabor,randrmanufacturingroverhe 1-7 Anractivityrbaserisrarmeasurerofrwhat
ad.rArperiodrcostrisrarcostrthatrisrtakenrdirectlyrtor everrcausesrtherincurrencerofrarvariablercost.r
therincomerstatementrasranrexpenserinrtherperio Examplesrofractivityrbasesrincluderunitsrprodu
drinrwhichritrisrincurred. ced,runitsrsold,rlettersrtyped,rbedsrinrarhospita
l,rmealsrservedrinrarcafe,rservicercallsrmade,ret
c.
1-8 Therlinearrassumptionrisrreasonablyrvalidr
, providingrthatrthercostrformularisrusedronlyrwithi
nrtherrelevantrrange.
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
r r
ChapterrOne:rManagerialrAccountingrandrCostrConcepts
ChapterrTwo:rJob-OrderrCosting:rCalculatingrUnitrProductrCosts
ChapterrThree:rJob-OrderrCosting:rCostrFlowsrandrExternalrReporting
ChapterrFour:rProcessrCosting
ChapterrFive:rCost-Volume-ProfitrRelationships
ChapterrSix:rVariablerCostingrandrSegmentrReporting:rToolsrforrManagement
ChapterrSeven:rActivity-BasedrCosting:rArToolrtorAidrDecisionrMaking
ChapterrEight:rMasterrBudgeting
ChapterrNine:rFlexiblerBudgetsrandrPerformancerAnalysis
ChapterrTen:rStandardrCostsrandrVariances
ChapterrEleven:rResponsibilityrAccountingrSystems
ChapterrTwelve:rStrategicrPerformancerMeasurement
ChapterrThirteen:rDifferentialrAnalysis:rTherKeyrtorDecisionrMaking
ChapterrFourteen:rCapitalrBudgetingrDecisions
ChapterrFifteen:rStatementrofrCashrFlows
ChapterrSixteen:rFinancialrStatementrAnalysis
,Chapter 1 r
Managerial Accounting and Cost Concepts
r r r r
Questions
1-1 Therthreermajorrtypesrofrproductrcostsri 1-4
nrarmanufacturingrcompanyrarerdirectrmaterials a. Variablercost:rThervariablercostrperrunitrisrc
,rdirectrlabor,randrmanufacturingroverhead. onstant,rbutrtotalrvariablercostrchangesrinrdi
rectrproportionrtorchangesrinrvolume.
1-2 b. Fixedrcost:rThertotalrfixedrcostrisrconstantrwit
a. Directrmaterialsrareranrintegralrpartrofrarfi hinrtherrelevantrrange.rTheraveragerfixedrcost
nishedrproductrandrtheirrcostsrcanrberconvenien rperrunitrvariesrinverselyrwithrchangesr inrvolu
tlyrtracedrtorit. me.
b. Indirectrmaterialsrarergenerallyrsmallritem c. Mixedrcost:rArmixedrcostrcontainsrbothrv
srofrmaterialrsuchrasrgluerandrnails.rTheyrmayrber ariablerandrfixedrcostrelements.
anrintegralrpartrofrarfinishedrproductrbutrtheirrcost
srcanrbertracedrtortherproductronlyratrgreatrcostro 1-5
rrinconvenience. a. Unitrfixedrcostsrdecreaserasrtheractivityrlevelri
c. Directrlaborrconsistsrofrlaborrcostsrthatrc ncreases.
anrbereasilyrtracedrtorparticularrproducts. b. Unitrvariablercostsrremainrconstantrasrthera
Directrlaborrisralsorcalledr―touchrlabor.‖ ctivityrlevelrincreases.
d. Indirectrlaborrconsistsrofrtherlaborrcostsro c. Totalrfixedrcostsrremainrconstantrasrthera
frjanitors,rsupervisors,rmaterialsrhandlers,randrot ctivityrlevelrincreases.
herrfactoryrworkersrthatrcannotrberconvenientlyr d. Totalrvariablercostsrincreaserasrtheractivityrl
tracedrtorparticularrproducts.rTheserlaborrcostsr evelrincreases.
arerincurredrtorsupportrproduction,rbutrtherwork
ersrinvolvedrdornotrdirectlyrworkronrtherproduct. 1-6
e. Manufacturingroverheadrincludesrallrmanu a. Costrbehavior:rCostrbehaviorrrefersrtortherw
facturingrcostsrexceptrdirectrmaterialsrandrdirectrl ayrinrwhichrcostsrchangerinrresponsertorcha
abor.rConsequently,rmanufacturingroverheadrincl ngesrinrarmeasurerofractivityrsuchrasrsalesrv
udesrindirectrmaterialsrandrindirectrlaborrasrwellra olume,rproductionrvolume,rorrordersrprocess
srotherrmanufacturingrcosts. ed.
b. Relevantrrange:rTherrelevantrrangerisrtherr
1-3 angerofractivityrwithinrwhichrassumptionsra
Arproductrcostrisranyrcostrinvolvedrinrpur boutrvariablerandrfixedrcostrbehaviorrarerva
chasingrorrmanufacturingrgoods.rInrthercaserofrm lid.
anufacturedrgoods,rthesercostsrconsistrofrdirectr
materials,rdirectrlabor,randrmanufacturingroverhe 1-7 Anractivityrbaserisrarmeasurerofrwhat
ad.rArperiodrcostrisrarcostrthatrisrtakenrdirectlyrtor everrcausesrtherincurrencerofrarvariablercost.r
therincomerstatementrasranrexpenserinrtherperio Examplesrofractivityrbasesrincluderunitsrprodu
drinrwhichritrisrincurred. ced,runitsrsold,rlettersrtyped,rbedsrinrarhospita
l,rmealsrservedrinrarcafe,rservicercallsrmade,ret
c.
1-8 Therlinearrassumptionrisrreasonablyrvalidr
, providingrthatrthercostrformularisrusedronlyrwithi
nrtherrelevantrrange.
