Solution manual for managerial accounting 18th edition by ray garrison eric noreen and peter brewerrr

SOLUTION MANUAL FOR M n n n




ANAGERIAL ACCOUNTING n n




18th EDITIONBY RAY GARRI
n n n n




SON, ERIC NOREEN AND PE
n n n n




TER BREWERR ALL CHAPT
n n n




ERSINCLUDED 2023/2024.
n n




ManagerialnAccountingn18thnEdition,nSolutionsnManual,nChaptern1 1

,Chapter 1 n




Managerial Accounting and Cost Concepts
n n n n




Questions


1-1 Thenthreenmajorntypesnofnproductncostsni 1-4
nnanmanufacturingncompanynarendirectnmaterial a. Variablencost:nThenvariablencostnpernunitnisn
s,ndirectnlabor,nandnmanufacturingnoverhead. constant,nbutntotalnvariablencostnchangesninn
directnproportionntonchangesninnvolume.
1-2 b. Fixedncost:nThentotalnfixedncostnisnconstantnw
a. Directnmaterialsnarenannintegralnpartnofnanf ithinnthenrelevantnrange.nThenaveragenfixednco
inishednproductnandntheirncostsncannbenconveni stnpernunitnvariesninverselynwithnchangesninnv
entlyntracedntonit. olume.
b. Indirectnmaterialsnarengenerallynsmallnitem c. Mixedncost:nAnmixedncostncontainsnbothn
snofnmaterialnsuchnasngluenandnnails.nTheynmaynb variablenandnfixedncostnelements.
enannintegralnpartnofnanfinishednproductnbutntheirnc
ostsncannbentracedntonthenproductnonlynatngreatnc 1-5
ostnorninconvenience. a. Unitnfixedncostsndecreasenasnthenactivitynlevelni
c. Directnlabornconsistsnofnlaborncostsnthatn ncreases.
cannbeneasilyntracedntonparticularnproducts. b. Unitnvariablencostsnremainnconstantnasnthen
Directn laborn isn alson calledn ―touchn labor.‖ activitynlevelnincreases.
d. Indirectnlabornconsistsnofnthenlaborncostsn c. Totalnfixedncostsnremainnconstantnasnthen
ofnjanitors,nsupervisors,nmaterialsnhandlers,nandn activitynlevelnincreases.
othernfactorynworkersnthatncannotnbenconvenien d. Totalnvariablencostsnincreasenasnthenactivitynl
tlyntracedntonparticularnproducts.nThesenlabornco evelnincreases.
stsnarenincurredntonsupportnproduction,nbutnthen
workersninvolvedndonnotndirectlynworknonnthenpr 1-6
oduct. a. Costnbehavior:nCostnbehaviornrefersntonthen
e. Manufacturingnoverheadnincludesnallnman wayninnwhichncostsnchangeninnresponsentonc
ufacturingncostsnexceptndirectnmaterialsnandndirec hangesninnanmeasurenofnactivitynsuchnasnsal
tnlabor.nConsequently,nmanufacturingnoverheadni esnvolume,nproductionnvolume,nornordersnpr
ncludesnindirectnmaterialsnandnindirectnlabornasnw ocessed.
ellnasnothernmanufacturingncosts. b. Relevantnrange:nThenrelevantnrangenisnthenr
angenofnactivitynwithinnwhichnassumptionsna
1-3 boutnvariablenandnfixedncostnbehaviornarenv
Anproductncostnisnanyncostninvolvedninnpu alid.
rchasingnornmanufacturingngoods.nInnthencasenofn
manufacturedngoods,nthesencostsnconsistnofndire 1-7 Annactivitynbasenisnanmeasurenofnwha
ctnmaterials,ndirectnlabor,nandnmanufacturingnover teverncausesnthenincurrencenofnanvariablencost.
head.nAnperiodncostnisnancostnthatnisntakenndirectl nExamplesnofnactivitynbasesnincludenunitsn prod
yntonthenincomenstatementnasnannexpenseninnthen uced,nunitsnsold,nlettersntyped,nbedsninnanhosp
periodninnwhichnitnisnincurred. ital,nmealsnservedninnancafe,nservicencallsnmade
,netc.

1-8 Thenlinearnassumptionnisnreasonablynvali
dnprovidingnthatnthencostnformulanisnusednonlynwit
hinnthenrelevantnrange.

ManagerialnAccountingn18thnEdition,nSolutionsnManual,nChaptern1 1

,©nMcGrawnHillnLLC.nAllnrightsnreserved.nNonreproductionnorndistributionnwithoutnthenpriornwrittennconsentnofn
McGrawnHillnLLC.




ManagerialnAccountingn18thnEdition,nSolutionsnManual,nChaptern1 1

, 1-9 Andiscretionarynfixedncostnhasnanfairlyn 1-11 Thentraditionalnapproachnorganizesncostsn
shortnplanningnhorizon— bynfunction,nsuchnasnproduction,nselling,nandnad
usuallynanyear.nSuchncostsnarisenfromnannualnd ministration.nWithinnanfunctionalnarea,nfixednandn
ecisionsnbynmanagementntonspendnonncertainnf variablencostsnarenintermingled.nThencontribution
ixedncostnitems,nsuchnasnadvertising,nresearch, napproachnincomenstatementnorganizesncostsnbyn

nandnmanagement ndevelopment.nAncommittedn behavior,nfirstndeductingnvariablenexpensesntonob
fixedncostnhasnanlongnplanningnhorizon— tainncontributionnmargin,nandnthenndeductingnfixe
generallynmanynyears.nSuchncostsnrelatentonanc dnexpensesntonobtainnnetnoperatingnincome.
ompany’sninvestmentninnfacilities,nequipment,na
ndnbasicnorganization.nOncensuchncostsnhavenb 1-12 Thencontributionnmarginnisntotalnsalesn
eennincurred,ntheynaren―lockednin‖nfornmanynyea revenuenlessntotalnvariablenexpenses.
rs.
1-13 Andifferentialncostnisnancostnthatndiffersnbe
1-10 Yes.nAsnthenanticipatednlevelnofnactivitync tweennalternativesninnandecision.n Ansunkn costnisna
hanges,nthenlevelnofnfixedncostsnneededntonsuppo ncostnthatnhasnalreadynbeennincurrednandncannotn

rtnoperationsnmaynalsonchange.nMostnfixedncostsna benalterednbynanyndecisionntakennnownorninnthenfu
renadjustednupwardnandndownwardninnlargenstep ture.nAnnopportunityncostnisnthenpotentialnbenefitnt
s,nrathernthannbeingnabsolutelynfixednatnonenlevelnf hatnisngivennupnwhennonenalternativenisnselectedn
ornallnrangesnofnactivity. overnanother.

1-14 No,ndifferentialncostsncannbeneithernvari
ablenornfixed.nFornexample,nthenalternativesnmig
htnconsistnofnpurchasingnonenmachinenratherntha
nnanotherntonmakenanproduct.nThendifferencenbet
weennthenfixedncostsnofnpurchasingnthentwonmac
hinesnisnandifferentialncost.




©nMcGrawnHillnLLC.nAllnrightsnreserved.nNonreproductionnorndistributionnwithoutnthenpriornwrittennconsentnof
nMcGrawnHillnLLC.




ManagerialnAccountingn18thnEdition,nSolutionsnManual,nChaptern1