Solution Manual for Managerial Accounting, 18th Edition By Ray Garrison, Eric Noreen and Peter Brewer, Verified Chapters 1 - 16, Complete Newest Version

Solution Manual for Managerial Accounting,
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18thEditionbyGarrison,NoreenandBrewer
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Verified Chapter's 1- 16| Complete
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,Tableof Contents
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Chapter One: Managerial Accounting and Cost Concepts
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Chapter Two: Job-Order Costing: Calculating Unit Product Costs
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Chapter Three: Job-Order Costing: Cost Flows and External Reporting
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Chapter Four: Process Costing
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Chapter Five: Cost-Volume-Profit Relationships
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Chapter Six: Variable Costing and Segment Reporting: Tools for Management
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Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
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Chapter Eight: Master Budgeting
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Chapter Nine: Flexible Budgets and Performance Analysis
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Chapter Ten: Standard Costs and Variances
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Chapter Eleven: Responsibility Accounting Systems
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Chapter Twelve: Strategic Performance Measurement
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Chapter Thirteen: Differential Analysis: The Key to Decision Making
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Chapter Fourteen: Capital Budgeting Decisions
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Chapter Fifteen: Statement of Cash Flows
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Chapter Sixteen: Financial Statement Analysis
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,Chapter 1 n




ManagerialAccountingandCostConcepts n n n n




Questions

1-1 Thethreemajortypesofproductcosts in a n n n n n n n n
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manufacturing company are direct materials, direct
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a. Variable cost: The variable cost per unit is constant, n n n n n n n n




labor, and manufacturing overhead.
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buttotalvariable costchangesin direct proportion
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to changes in volume.
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1-2 b. Fixed cost: The total fixed cost is constant n n n n n n n




a. Direct materialsare anintegralpart ofa finished n n n n n n n n
withintherelevantrange.Theaveragefixed cost per
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product and their costs can be conveniently traced to it.
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unit varies inversely with changes in volume.
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b. Indirect materials are generally small items of n n n n n n
c. Mixedcost:Amixedcostcontainsboth variable n n n n n n n




material such as glue and nails. They maybe anintegral
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and fixed cost elements.
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part ofafinishedproduct but their costs can be traced to
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the product only at great cost or inconvenience.
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1-5
c. Directlaborconsistsoflaborcoststhat can be n n n n n n n n
a. Unitfixedcostsdecreaseas theactivitylevel
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easily traced to particular products.
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increases.
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Directlaborisalsocalled―touchlabor.‖
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b. Unitvariablecostsremainconstantasthe activity
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d. Indirect labor consists of the labor costs n n n n n n level increases.
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ofjanitors,supervisors,materialshandlers,and other
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c. Totalfixedcostsremainconstantasthe activity n n n n n n n




factory workers that cannot be conveniently traced to
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level increases.
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particular products. These labor costs are incurred to
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d. Totalvariablecostsincreaseastheactivity level n n n n n n n




support production, but the workers involved do not
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increases.
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directly work on the product.
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e. Manufacturing overhead includes all n n n


1-6
manufacturing costs except direct materials and direct
a. Cost behavior: Cost behavior refers to the way in
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labor. Consequently, manufacturing overheadincludes
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which costs change in response to changes in a
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indirectmaterialsandindirect labor as well as other
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measure of activity such as
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manufacturing costs.
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salesvolume,productionvolume,ororders
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processed.
1-3 A product cost is any cost involved in purchasing
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b. Relevant range: The relevant range is the
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ormanufacturing goods.In the case of manufactured n n n n n n




rangeofactivitywithinwhichassumptions about
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goods, these costs consist of n n n n n n n




variable and fixed cost behavior are valid.
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directmaterials,directlabor,andmanufacturing
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overhead. A period cost is a cost that is taken directly to
1-7
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the income statement as an expense in the period in which
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An activity base is a measure of whatever n n n n n n n




it is incurred.
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causesthe incurrence ofavariable cost.Examples
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ofactivitybasesincludeunits produced, units sold,
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letterstyped,beds ina hospital,meals served ina
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cafe,service calls made, etc.
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1-8 The linear assumption is reasonably valid n n n n n




providingthatthecostformulaisusedonly within the
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relevant range.
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, 1-9 A discretionary fixed cost has a fairly short n n n n n n n 1-11 Thetraditionalapproachorganizescosts by n n n n n




planning horizon—usually a year. Such costs arise
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from annual decisions by management to spend on
n n n n n n n n Within a functional area, fixed and variable costs are
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certain fixed cost items, such as advertising, research,
n n n n n n n n intermingled. The contribution approach income
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and managementdevelopment.Acommittedfixed
n n n n n n statement organizes costs by behavior, first deducting
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cost has a long planning horizon—generally many
n n n n n n n variableexpensestoobtaincontributionmargin, andthen
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years. Such costs relate to a company’s investment in
n n n n n n n n n deducting fixedexpensestoobtainnet operating income.
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facilities, equipment, and basic organization. Once
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such costs have been
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1-12 Thecontributionmarginistotalsales revenue n n n n n n




incurred,theyare―lockedin‖formanyyears.
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less total variable expenses.
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1-10 Yes. As the anticipated level of activity changes, n n n n n n n
1-13 A differential cost is a cost that differs between
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the level of fixed costs needed to support operations may
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alternatives in a decision. A sunk cost is a cost that has
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also change. Most fixed costs are adjusted upward and
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already been incurred and cannot be altered by any
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downward in largesteps,ratherthanbeingabsolutely
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decision taken now or inthefuture.Anopportunitycostisthe
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fixedat one level for all ranges of activity.
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potential benefit that is given up when one alternative is
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selected over another.
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1-14 No, differential costs can be either variable or n n n n n n n




fixed. For example, the alternatives mightconsist
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ofpurchasing onemachinerather thananothertomakea
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product.Thedifference between the fixed costs of
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purchasing the two machines is a differential cost.
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Managerial Accounting 18th Edition, Solutions Manual,n n n n n