Solution Manual for Managerial Accounting,
n n n n
18th Editionn
n By Ray Garrison, Eric Noreen and Peter Brewer
n n n n n n n
n Verified Chapter's 1 - 16 | Complete
n n n n n n
,TableofContentsn n
Chapter n One: n Managerial n Accounting n and n Cost n Concepts
Chapter nTwo: nJob-Order nCosting: nCalculating nUnit nProduct
n
Costs
n
Chapter nThree: nJob-Order nCosting: nCost nFlows nand nExternal nReporting
Chapter nFour: nProcess nCosting
n
Chapter n Five: n Cost-Volume-Profit n Relationships
Chapter nSix: nVariable nCosting nand nSegment nReporting: nTools nfor
Management nChapter n Seven: n Activity-Based n Costing: n A n Tool n to
n
n Aid n Decision n Making nChapter nEight: nMaster nBudgeting
Chapter nNine: nFlexible nBudgets nand nPerformance nAnalysis
Chapter nTen: nStandard nCosts nand nVariances
n
Chapter nEleven: nResponsibility nAccounting nSystems
Chapter nTwelve: nStrategic nPerformance nMeasurement
n
Chapter nThirteen: nDifferential nAnalysis: nThe nKey nto nDecision nMaking
Chapter nFourteen: nCapital nBudgeting nDecisions
n
Chapter nFifteen: nStatement nofDCash nFlows
Chapter nSixteen: nFinancial nStatement
n
Analysis
n
,Chapter 1 n
Managerial Accounting and Cost Concepts
n n n n
Questions
1-1 The nthree nmajor ntypes nof nproduct 1-4
ncost ns nin na nmanufacturing ncompany nare a. Variable ncost: nThe nvariable ncostDper
ndirect nmat nerials, ndirect nlabor, nand nunit ni n s nconstant, nbut ntotal nvariable
nmanufacturing noverhe nad. ncost nchange n s nin ndirect nproportion nto
nchanges nin nvolu nme.
1-2 b. Fixed ncost: nThe ntotal nfixed ncost nis
a. Direct nmaterials nare nan nintegral npart nconstant nwithin nthe nrelevant nrange. nThe
nofD n a nfinished nproductDand ntheir ncosts naverage nfix ned ncost nper nunitDvaries
ncan nbe ncon nveniently ntraced nto nit. ninversely nwith nchan nges n in nvolume.
b. Indirect nmaterials nare ngenerally nsmall c. Mixed ncost: nA nmixed ncost ncontains
nite nms nof nmaterial nsuch nas nglue nand nnails. nbot nh nvariable nand nfixed ncost
nThey nm nay nbe nan nintegral npart nofDa nelements.
nfinished nproduct nbut ntheir n costs n can n be
n traced n to n the n product n only nat ngreat 1-5
ncost nor ninconvenience. a. Unit nfixed ncosts ndecrease nas nthe nactivity
c. Direct nlabor nconsists nof nlabor ncosts nlev nel nincreases.
nth nat ncan nbe neasily ntraced nto nparticular b. Unit nvariable ncosts nremain nconstantDas
nproduct ns. nth ne nactivity nlevel nincreases.
Direct nlabor nis nalso ncalled n―touch nlabor.‖ c. Total nfixed ncosts nremain nconstant nas
d. Indirect nlabor nconsists nof nthe nlabor nth ne nactivity nlevel nincreases.
ncost n s nofDjanitors, nsupervisors, nmaterials d. Total nvariable ncosts nincrease nas nthe
nhandlers, na nnd nother nfactory nworkers nthat nactivit ny nlevel nincreases.
ncannotDbe nconv neniently ntraced nto
nparticular nproducts. nThese nl nabor ncosts nare 1-6
nincurred nto nsupport nproduction, nbut nthe a. Cost nbehavior: nCostDbehavior nrefers nto
nworkers ninvolved ndo nnot ndirectly nwor nkDon nthe nway n in n which n costs n change n in
nthe nproduct. n response n t no nchanges nin na nmeasure
e. Manufacturing noverhead nincludes nall nof nactivity nsuch na n s nsales nvolume,
nma nnufacturing ncosts nexcept ndirect nmaterials nproduction nvolume, nor nord ners
nand nd nirectDlabor. nConsequently, nprocessed.
nmanufacturing noverh nead nincludes nindirect b. Relevant nrange: nThe nrelevant nrange nis
nmaterials nand nindirect nlab nor nas nwell nas nth ne nrange nof nactivity nwithin nwhich
nother nmanufacturing ncosts. nassumpti nons nabout nvariable nand nfixed
ncost nbehavi nor nare nvalid.
1-3
A nproduct ncost nis nany ncostDinvolved 1-7 An nactivity nbase nis na nmeasure
nin npurchasing nor nmanufacturing ngoods. nIn nofDw nhatever ncauses nthe nincurrence nof na
nthe ncas ne nof nmanufactured ngoods, nthese nvariable ncost. nExamples nof nactivity nbases
ncosts nconsist n of ndirect nmaterials, ndirect ninclude nuni nts nproduced, nunits nsold,
nlabor, nand nmanufactu nring noverhead. nA nletters ntyped, nbeds n in na nhospital, nmeals
nperiod ncost nis na ncost nthat nis nt naken nserved nin na ncafe, nservic n e ncalls nmade,
ndirectly nto nthe nincome nstatement nas nan ne netc.
nxpense nin nthe nperiod nin nwhich nit nis
nincurred.
, 1-8 The nlinear nassumption nis nreasonably
nv nalid nproviding nthat nthe ncost nformula nis
nused non nly nwithin nthe nrelevant nrange.
n n n n
18th Editionn
n By Ray Garrison, Eric Noreen and Peter Brewer
n n n n n n n
n Verified Chapter's 1 - 16 | Complete
n n n n n n
,TableofContentsn n
Chapter n One: n Managerial n Accounting n and n Cost n Concepts
Chapter nTwo: nJob-Order nCosting: nCalculating nUnit nProduct
n
Costs
n
Chapter nThree: nJob-Order nCosting: nCost nFlows nand nExternal nReporting
Chapter nFour: nProcess nCosting
n
Chapter n Five: n Cost-Volume-Profit n Relationships
Chapter nSix: nVariable nCosting nand nSegment nReporting: nTools nfor
Management nChapter n Seven: n Activity-Based n Costing: n A n Tool n to
n
n Aid n Decision n Making nChapter nEight: nMaster nBudgeting
Chapter nNine: nFlexible nBudgets nand nPerformance nAnalysis
Chapter nTen: nStandard nCosts nand nVariances
n
Chapter nEleven: nResponsibility nAccounting nSystems
Chapter nTwelve: nStrategic nPerformance nMeasurement
n
Chapter nThirteen: nDifferential nAnalysis: nThe nKey nto nDecision nMaking
Chapter nFourteen: nCapital nBudgeting nDecisions
n
Chapter nFifteen: nStatement nofDCash nFlows
Chapter nSixteen: nFinancial nStatement
n
Analysis
n
,Chapter 1 n
Managerial Accounting and Cost Concepts
n n n n
Questions
1-1 The nthree nmajor ntypes nof nproduct 1-4
ncost ns nin na nmanufacturing ncompany nare a. Variable ncost: nThe nvariable ncostDper
ndirect nmat nerials, ndirect nlabor, nand nunit ni n s nconstant, nbut ntotal nvariable
nmanufacturing noverhe nad. ncost nchange n s nin ndirect nproportion nto
nchanges nin nvolu nme.
1-2 b. Fixed ncost: nThe ntotal nfixed ncost nis
a. Direct nmaterials nare nan nintegral npart nconstant nwithin nthe nrelevant nrange. nThe
nofD n a nfinished nproductDand ntheir ncosts naverage nfix ned ncost nper nunitDvaries
ncan nbe ncon nveniently ntraced nto nit. ninversely nwith nchan nges n in nvolume.
b. Indirect nmaterials nare ngenerally nsmall c. Mixed ncost: nA nmixed ncost ncontains
nite nms nof nmaterial nsuch nas nglue nand nnails. nbot nh nvariable nand nfixed ncost
nThey nm nay nbe nan nintegral npart nofDa nelements.
nfinished nproduct nbut ntheir n costs n can n be
n traced n to n the n product n only nat ngreat 1-5
ncost nor ninconvenience. a. Unit nfixed ncosts ndecrease nas nthe nactivity
c. Direct nlabor nconsists nof nlabor ncosts nlev nel nincreases.
nth nat ncan nbe neasily ntraced nto nparticular b. Unit nvariable ncosts nremain nconstantDas
nproduct ns. nth ne nactivity nlevel nincreases.
Direct nlabor nis nalso ncalled n―touch nlabor.‖ c. Total nfixed ncosts nremain nconstant nas
d. Indirect nlabor nconsists nof nthe nlabor nth ne nactivity nlevel nincreases.
ncost n s nofDjanitors, nsupervisors, nmaterials d. Total nvariable ncosts nincrease nas nthe
nhandlers, na nnd nother nfactory nworkers nthat nactivit ny nlevel nincreases.
ncannotDbe nconv neniently ntraced nto
nparticular nproducts. nThese nl nabor ncosts nare 1-6
nincurred nto nsupport nproduction, nbut nthe a. Cost nbehavior: nCostDbehavior nrefers nto
nworkers ninvolved ndo nnot ndirectly nwor nkDon nthe nway n in n which n costs n change n in
nthe nproduct. n response n t no nchanges nin na nmeasure
e. Manufacturing noverhead nincludes nall nof nactivity nsuch na n s nsales nvolume,
nma nnufacturing ncosts nexcept ndirect nmaterials nproduction nvolume, nor nord ners
nand nd nirectDlabor. nConsequently, nprocessed.
nmanufacturing noverh nead nincludes nindirect b. Relevant nrange: nThe nrelevant nrange nis
nmaterials nand nindirect nlab nor nas nwell nas nth ne nrange nof nactivity nwithin nwhich
nother nmanufacturing ncosts. nassumpti nons nabout nvariable nand nfixed
ncost nbehavi nor nare nvalid.
1-3
A nproduct ncost nis nany ncostDinvolved 1-7 An nactivity nbase nis na nmeasure
nin npurchasing nor nmanufacturing ngoods. nIn nofDw nhatever ncauses nthe nincurrence nof na
nthe ncas ne nof nmanufactured ngoods, nthese nvariable ncost. nExamples nof nactivity nbases
ncosts nconsist n of ndirect nmaterials, ndirect ninclude nuni nts nproduced, nunits nsold,
nlabor, nand nmanufactu nring noverhead. nA nletters ntyped, nbeds n in na nhospital, nmeals
nperiod ncost nis na ncost nthat nis nt naken nserved nin na ncafe, nservic n e ncalls nmade,
ndirectly nto nthe nincome nstatement nas nan ne netc.
nxpense nin nthe nperiod nin nwhich nit nis
nincurred.
, 1-8 The nlinear nassumption nis nreasonably
nv nalid nproviding nthat nthe ncost nformula nis
nused non nly nwithin nthe nrelevant nrange.
