SOLUTION MANUAL:
For Managerial Accounting 17th Edition
by Ray H. Garrison Latest Update Graded A+
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17TH EDITION
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,Chapter 1
Managerial Accounting And Cost
Concepts
Questions
1-1 The Three Major Types Of 1-3 A Product Cost Is Any Cost
Product Costs In A Manufacturing Involved In Purchasing Or Manufacturing
Company Are Direct Materials, Direct Goods. In The Case Of Manufactured
Labor, And Manufacturing Overhead. Goods, These Costs Consist Of Direct
Materials, Direct Labor, And
1-2 Manufacturing Overhead. A Period Cost
a. Direct Materials Are An Integral Is A Cost That Is Taken Directly To The
Part Of A Finished Product And Their Income Statement As An Expense In The
Costs Can Be Conveniently Traced To It. Period In Which It Is Incurred.
b. Indirect Materials Are Generally
Small Items Of Material Such As Glue
And Nails. They May Be An Integral Part
Of A Finished Product But Their Costs
Can Be Traced To The Product Only At
Great Cost Or Inconvenience.
c. Direct Labor Consists Of Labor
Costs That Can Be Easily Traced To
Particular Products. Direct Labor Is Also
Called “Touch Labor.”
d. Indirect Labor Consists Of The
Labor Costs Of Janitors, Supervisors,
Materials Handlers, And Other Factory
Workers That Cannot Be Conveniently
Traced To Particular Products. These
Labor Costs Are Incurred To Support
Production, But The Workers Involved
Do Not Directly Work On The Product.
e. Manufacturing Overhead Includes
All Manufacturing Costs Except Direct
Materials And Direct Labor.
Consequently, Manufacturing Overhead
Includes Indirect Materials And Indirect
Labor As Well As Other Manufacturing
Costs.
Copyright 2021 © Mcgraw-Hill Education. All Rights Reserved. No Reproduction Or Distribution Without The
Prior Written Consent Of Mcgraw-Hill Education.
Solutions Manual, Chapter 1 1
,1-4 Certain Fixed Cost Items, Such As
a. Variable Cost: The Variable Cost Per Advertising, Research, And
Unit Is Constant, But Total Variable Management Development. A
Cost Changes In Direct Proportion To Committed Fixed Cost Has A Long
Changes In Volume. Planning Horizon—Generally Many
b. Fixed Cost: The Total Fixed Cost Is Years. Such Costs Relate To A
Constant Within The Relevant Company’s Investment In Facilities,
Range. The Average Fixed Cost Per Equipment, And Basic Organization.
Unit Varies Inversely With Changes Once Such Costs Have Been Incurred,
In Volume. They Are “Locked In” For Many Years.
c. Mixed Cost: A Mixed Cost Contains
Both Variable And Fixed Cost 1-10 Yes. As The Anticipated Level Of
Elements. Activity Changes, The Level Of Fixed
Costs Needed To Support Operations
1-5 May Also Change. Most Fixed Costs
a. Unit Fixed Costs Decrease As Are Adjusted Upward And Downward In
The Activity Level Increases. Large Steps, Rather Than Being
b. Unit Variable Costs Remain Constant Absolutely Fixed At One Level For All
As The Activity Level Increases. Ranges Of Activity.
c. Total Fixed Costs Remain Constant
As The Activity Level Increases.
d. Total Variable Costs Increase As
The Activity Level Increases.
1-6
a. Cost Behavior: Cost Behavior Refers
To The Way In Which Costs Change
In Response To Changes In A
Measure Of Activity Such As Sales
Volume, Production Volume, Or
Orders Processed.
b. Relevant Range: The Relevant
Range Is The Range Of Activity
Within Which Assumptions About
Variable And Fixed Cost Behavior
Are Valid.
1-7 An Activity Base Is A Measure Of
Whatever Causes The Incurrence Of A
Variable Cost. Examples Of Activity
Bases Include Units Produced, Units
Sold, Letters Typed, Beds In A Hospital,
Meals Served In A Cafe, Service Calls
Made, Etc.
1-8 The Linear Assumption Is
Reasonably Valid Providing That The
Cost Formula Is Used Only Within The
Relevant Range.
1-9 A Discretionary Fixed Cost Has
A Fairly Short Planning Horizon—
Usually A Year. Such Costs Arise
From Annual Decisions By
Management To Spend On
© The Mcgraw-Hill Companies, Inc., 2012. All Rights Reserved.
2 Managerial Accounting, 14th Edition
, 1-11 The Traditional
Approach Organizes Costs
By Function, Such As
Production, Selling, And
Administration. Within A
Functional Area, Fixed And
Variable Costs Are
Intermingled. The
Contribution Approach
Income Statement Organizes
Costs By Behavior, First
Deducting Variable Expenses
To Obtain Contribution
Margin, And Then Deducting
Fixed Expenses To Obtain
Net Operating Income.
1-12 The Contribution Margin Is Total
Sales Revenue Less Total Variable
Expenses.
1-13 A Differential Cost Is A Cost That
Differs Between Alternatives In A
Decision. An Opportunity Cost Is The
Potential Benefit That Is Given Up When
One Alternative Is Selected Over
Another. A Sunk Cost Is A Cost That Has
Already Been Incurred And Cannot Be
Altered By Any Decision Taken Now Or
In The Future.
1-14 No, Differential Costs Can Be
Either Variable Or Fixed. For Example,
The Alternatives Might Consist Of
Purchasing One Machine Rather Than
For Managerial Accounting 17th Edition
by Ray H. Garrison Latest Update Graded A+
PRINTEND PDF|ORIGINAL DIRECT FROM PUBLISHER|100%
VERIFIED ANSWERS|DOWLOAD IMMEDIATELY AFTER THE ORDER
17TH EDITION
Complete Test Bank, All Chapter Are Included
For More Documents Search (Testbankproferssor.Stuvia)
,Chapter 1
Managerial Accounting And Cost
Concepts
Questions
1-1 The Three Major Types Of 1-3 A Product Cost Is Any Cost
Product Costs In A Manufacturing Involved In Purchasing Or Manufacturing
Company Are Direct Materials, Direct Goods. In The Case Of Manufactured
Labor, And Manufacturing Overhead. Goods, These Costs Consist Of Direct
Materials, Direct Labor, And
1-2 Manufacturing Overhead. A Period Cost
a. Direct Materials Are An Integral Is A Cost That Is Taken Directly To The
Part Of A Finished Product And Their Income Statement As An Expense In The
Costs Can Be Conveniently Traced To It. Period In Which It Is Incurred.
b. Indirect Materials Are Generally
Small Items Of Material Such As Glue
And Nails. They May Be An Integral Part
Of A Finished Product But Their Costs
Can Be Traced To The Product Only At
Great Cost Or Inconvenience.
c. Direct Labor Consists Of Labor
Costs That Can Be Easily Traced To
Particular Products. Direct Labor Is Also
Called “Touch Labor.”
d. Indirect Labor Consists Of The
Labor Costs Of Janitors, Supervisors,
Materials Handlers, And Other Factory
Workers That Cannot Be Conveniently
Traced To Particular Products. These
Labor Costs Are Incurred To Support
Production, But The Workers Involved
Do Not Directly Work On The Product.
e. Manufacturing Overhead Includes
All Manufacturing Costs Except Direct
Materials And Direct Labor.
Consequently, Manufacturing Overhead
Includes Indirect Materials And Indirect
Labor As Well As Other Manufacturing
Costs.
Copyright 2021 © Mcgraw-Hill Education. All Rights Reserved. No Reproduction Or Distribution Without The
Prior Written Consent Of Mcgraw-Hill Education.
Solutions Manual, Chapter 1 1
,1-4 Certain Fixed Cost Items, Such As
a. Variable Cost: The Variable Cost Per Advertising, Research, And
Unit Is Constant, But Total Variable Management Development. A
Cost Changes In Direct Proportion To Committed Fixed Cost Has A Long
Changes In Volume. Planning Horizon—Generally Many
b. Fixed Cost: The Total Fixed Cost Is Years. Such Costs Relate To A
Constant Within The Relevant Company’s Investment In Facilities,
Range. The Average Fixed Cost Per Equipment, And Basic Organization.
Unit Varies Inversely With Changes Once Such Costs Have Been Incurred,
In Volume. They Are “Locked In” For Many Years.
c. Mixed Cost: A Mixed Cost Contains
Both Variable And Fixed Cost 1-10 Yes. As The Anticipated Level Of
Elements. Activity Changes, The Level Of Fixed
Costs Needed To Support Operations
1-5 May Also Change. Most Fixed Costs
a. Unit Fixed Costs Decrease As Are Adjusted Upward And Downward In
The Activity Level Increases. Large Steps, Rather Than Being
b. Unit Variable Costs Remain Constant Absolutely Fixed At One Level For All
As The Activity Level Increases. Ranges Of Activity.
c. Total Fixed Costs Remain Constant
As The Activity Level Increases.
d. Total Variable Costs Increase As
The Activity Level Increases.
1-6
a. Cost Behavior: Cost Behavior Refers
To The Way In Which Costs Change
In Response To Changes In A
Measure Of Activity Such As Sales
Volume, Production Volume, Or
Orders Processed.
b. Relevant Range: The Relevant
Range Is The Range Of Activity
Within Which Assumptions About
Variable And Fixed Cost Behavior
Are Valid.
1-7 An Activity Base Is A Measure Of
Whatever Causes The Incurrence Of A
Variable Cost. Examples Of Activity
Bases Include Units Produced, Units
Sold, Letters Typed, Beds In A Hospital,
Meals Served In A Cafe, Service Calls
Made, Etc.
1-8 The Linear Assumption Is
Reasonably Valid Providing That The
Cost Formula Is Used Only Within The
Relevant Range.
1-9 A Discretionary Fixed Cost Has
A Fairly Short Planning Horizon—
Usually A Year. Such Costs Arise
From Annual Decisions By
Management To Spend On
© The Mcgraw-Hill Companies, Inc., 2012. All Rights Reserved.
2 Managerial Accounting, 14th Edition
, 1-11 The Traditional
Approach Organizes Costs
By Function, Such As
Production, Selling, And
Administration. Within A
Functional Area, Fixed And
Variable Costs Are
Intermingled. The
Contribution Approach
Income Statement Organizes
Costs By Behavior, First
Deducting Variable Expenses
To Obtain Contribution
Margin, And Then Deducting
Fixed Expenses To Obtain
Net Operating Income.
1-12 The Contribution Margin Is Total
Sales Revenue Less Total Variable
Expenses.
1-13 A Differential Cost Is A Cost That
Differs Between Alternatives In A
Decision. An Opportunity Cost Is The
Potential Benefit That Is Given Up When
One Alternative Is Selected Over
Another. A Sunk Cost Is A Cost That Has
Already Been Incurred And Cannot Be
Altered By Any Decision Taken Now Or
In The Future.
1-14 No, Differential Costs Can Be
Either Variable Or Fixed. For Example,
The Alternatives Might Consist Of
Purchasing One Machine Rather Than
