Solution Manual for Managerial Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
5v 5v
Chapter5vOne:5vManagerial5vAccounting5vand5vCost5vConcepts5vC
hapter5vTwo:5vJob-
Order5vCosting:5vCalculating5vUnit5vProduct5vCosts
Chapter5vThree:5vJob-
Order5vCosting:5vCost5vFlows5vand5vExternal5vReporting5vChapter5vFour:5vProce
ss5vCosting
Chapter5vFive:5vCost-Volume-Profit5vRelationships
Chapter5vSix:5vVariable5vCosting5vand5vSegment5vReporting:5vTools5vfor5vManag
ement5vChapter5vSeven:5vActivity-
Based5vCosting:5vA5vTool5vto5vAid5vDecision5vMaking5vChapter5vEight:5vMaster5v
Budgeting
Chapter5vNine:5vFlexible5vBudgets5vand5vPerformance5vAnalysis5v
Chapter5vTen:5vStandard5vCosts5vand5vVariances
Chapter5vEleven:5vResponsibility5vAccounting5vSystems5vCh
apter5vTwelve:5vStrategic5vPerformance5vMeasurement
Chapter5vThirteen:5vDifferential5vAnalysis:5vThe5vKey5vto5vDecision5vMaking5v
Chapter5vFourteen:5vCapital5vBudgeting5vDecisions
Chapter5vFifteen:5vStatement5vof5vCash5vFlows5vC
hapter5vSixteen:5vFinancial5vStatement5vAnalysis
,Chapter 1 5v
Managerial Accounting and Cost Concepts
5v 5v 5v 5v
Questions
1-1 The5vthree5vmajor5vtypes5vof5vproduct5vc 1-4
osts5vin5va5vmanufacturing5vcompany5vare5vdire a. Variable5vcost:5vThe5vvariable5vcost5vper5vu
ct5vmaterials,5vdirect5vlabor,5vand5vmanufacturi nit5vis5vconstant,5vbut5vtotal5vvariable5vcost5vc
ng5voverhead. hanges5vin5vdirect5vproportion5vto5vchanges
5vin5vvolume.
1-2 b. Fixed5vcost:5vThe5vtotal5vfixed5vcost5vis5vconst
a. Direct5vmaterials5vare5van5vintegral5vpart5v ant5vwithin5vthe5vrelevant5vrange.5vThe5vavera
of5va5vfinished5vproduct5vand5vtheir5vcosts5vcan5v ge5vfixed5vcost5vper5vunit5vvaries5vinversely5v
be5vconveniently5vtraced5vto5vit. with5vchanges5vin5vvolume.
b. Indirect5vmaterials5vare5vgenerally5vsmall5v c. Mixed5vcost:5vA5vmixed5vcost5vcontains5vb
items5vof5vmaterial5vsuch5vas5vglue5vand5vnails.5vT oth5vvariable5vand5vfixed5vcost5velemen
hey5vmay5vbe5van5vintegral5vpart5vof5va5vfinished5vpr ts.
oduct5vbut5vtheir5vcosts5vcan5vbe5vtraced5vto5vthe5
vproduct5vonly5vat5vgreat5vcost5vor5vinconvenienc 1-5
e. a. Unit5vfixed5vcosts5vdecrease5vas5vthe5vactivity5vl
c. Direct5vlabor5vconsists5vof5vlabor5vcosts5vt evel5vincreases.
hat5vcan5vbe5veasily5vtraced5vto5vparticular5vpr b. Unit5vvariable5vcosts5vremain5vconstant5vas5v
oducts. the5vactivity5vlevel5vincreases.
Direct5vlabor5vis5valso5vcalled5v―touch5vlabor.‖ c. Total5vfixed5vcosts5vremain5vconstant5vas5v
d. Indirect5vlabor5vconsists5vof5vthe5vlabor5vc the5vactivity5vlevel5vincreases.
osts5vof5vjanitors,5vsupervisors,5vmaterials5vhandl d. Total5vvariable5vcosts5vincrease5vas5vthe5vacti
ers,5vand5vother5vfactory5vworkers5vthat5vcannot vity5vlevel5vincreases.
5vbe5vconveniently5vtraced 5vto5vparticular5vprodu
cts.5vThese5vlabor5vcosts5vare5vincurred5vto5vsup 1-6
port5vproduction,5vbut5vthe5vworkers5vinvolved5v a. Cost5vbehavior:5vCost5vbehavior5vrefers5vto5
do5vnot5vdirectly5vwork5von5vthe5vproduct. vthe5vway5vin5vwhich5vcosts5vchange5vin5vres
e. Manufacturing5voverhead5vincludes5vall5v ponse5vto5vchanges5vin5va5vmeasure5vof5vact
manufacturing5vcosts5vexcept5vdirect5vmaterials5v ivity5vsuch5vas5vsales5vvolume,5vproduction5v
and5vdirect5vlabor.5vConsequently,5vmanufacturi volume,5vor5vorders5vprocessed.
ng5voverhead5vincludes5vindirect5vmaterials5vand5vi b. Relevant5vrange:5vThe5vrelevant5vrange5vis5
ndirect5vlabor5vas5vwell5vas5vother5vmanufacturin vthe5vrange5vof5vactivity5vwithin5vwhich5vassu
g5vcosts. mptions5vabout5vvariable5vand5vfixed5vcost5v
behavior5vare5vvalid.
1-3
A5vproduct5vcost5vis5vany5vcost5vinvolved 1-7 An5vactivity5vbase5vis5va5vmeasure5vof
5vin5vpurchasing5vor5vmanufacturing5vgoods.5vIn5vt 5vwhatever5vcauses5vthe5vincurrence5vof5va5vvar
he5vcase5vof5vmanufactured5vgoods,5vthese5vcost iable5vcost.5vExamples5vof5vactivity5vbases5vincl
s5vconsist5vof5vdirect5vmaterials,5vdirect5vlabor,5van ude5vunits5vproduced,5vunits5vsold,5vletters5vty
d5vmanufacturing5voverhead.5vA5vperiod5vcost5vis5 ped,5vbeds5vin5va5vhospital,5vmeals5vserved5vin5v
va5vcost5vthat5vis5vtaken5vdirectly5vto5vthe5vincome a5vcafe,5vservice5vcalls5vmade,5vetc.
5vstatement5vas5van5vexpense5vin5vthe5vperiod5vin
5vwhich5vit5vis5vincurred. 1-8 The5vlinear5vassumption5vis5vreasonably
, valid5vproviding5vthat5vthe5vcost5vformula5vis5vuse
d5vonly5vwithin5vthe5vrelevant5vrange.
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
5v 5v
Chapter5vOne:5vManagerial5vAccounting5vand5vCost5vConcepts5vC
hapter5vTwo:5vJob-
Order5vCosting:5vCalculating5vUnit5vProduct5vCosts
Chapter5vThree:5vJob-
Order5vCosting:5vCost5vFlows5vand5vExternal5vReporting5vChapter5vFour:5vProce
ss5vCosting
Chapter5vFive:5vCost-Volume-Profit5vRelationships
Chapter5vSix:5vVariable5vCosting5vand5vSegment5vReporting:5vTools5vfor5vManag
ement5vChapter5vSeven:5vActivity-
Based5vCosting:5vA5vTool5vto5vAid5vDecision5vMaking5vChapter5vEight:5vMaster5v
Budgeting
Chapter5vNine:5vFlexible5vBudgets5vand5vPerformance5vAnalysis5v
Chapter5vTen:5vStandard5vCosts5vand5vVariances
Chapter5vEleven:5vResponsibility5vAccounting5vSystems5vCh
apter5vTwelve:5vStrategic5vPerformance5vMeasurement
Chapter5vThirteen:5vDifferential5vAnalysis:5vThe5vKey5vto5vDecision5vMaking5v
Chapter5vFourteen:5vCapital5vBudgeting5vDecisions
Chapter5vFifteen:5vStatement5vof5vCash5vFlows5vC
hapter5vSixteen:5vFinancial5vStatement5vAnalysis
,Chapter 1 5v
Managerial Accounting and Cost Concepts
5v 5v 5v 5v
Questions
1-1 The5vthree5vmajor5vtypes5vof5vproduct5vc 1-4
osts5vin5va5vmanufacturing5vcompany5vare5vdire a. Variable5vcost:5vThe5vvariable5vcost5vper5vu
ct5vmaterials,5vdirect5vlabor,5vand5vmanufacturi nit5vis5vconstant,5vbut5vtotal5vvariable5vcost5vc
ng5voverhead. hanges5vin5vdirect5vproportion5vto5vchanges
5vin5vvolume.
1-2 b. Fixed5vcost:5vThe5vtotal5vfixed5vcost5vis5vconst
a. Direct5vmaterials5vare5van5vintegral5vpart5v ant5vwithin5vthe5vrelevant5vrange.5vThe5vavera
of5va5vfinished5vproduct5vand5vtheir5vcosts5vcan5v ge5vfixed5vcost5vper5vunit5vvaries5vinversely5v
be5vconveniently5vtraced5vto5vit. with5vchanges5vin5vvolume.
b. Indirect5vmaterials5vare5vgenerally5vsmall5v c. Mixed5vcost:5vA5vmixed5vcost5vcontains5vb
items5vof5vmaterial5vsuch5vas5vglue5vand5vnails.5vT oth5vvariable5vand5vfixed5vcost5velemen
hey5vmay5vbe5van5vintegral5vpart5vof5va5vfinished5vpr ts.
oduct5vbut5vtheir5vcosts5vcan5vbe5vtraced5vto5vthe5
vproduct5vonly5vat5vgreat5vcost5vor5vinconvenienc 1-5
e. a. Unit5vfixed5vcosts5vdecrease5vas5vthe5vactivity5vl
c. Direct5vlabor5vconsists5vof5vlabor5vcosts5vt evel5vincreases.
hat5vcan5vbe5veasily5vtraced5vto5vparticular5vpr b. Unit5vvariable5vcosts5vremain5vconstant5vas5v
oducts. the5vactivity5vlevel5vincreases.
Direct5vlabor5vis5valso5vcalled5v―touch5vlabor.‖ c. Total5vfixed5vcosts5vremain5vconstant5vas5v
d. Indirect5vlabor5vconsists5vof5vthe5vlabor5vc the5vactivity5vlevel5vincreases.
osts5vof5vjanitors,5vsupervisors,5vmaterials5vhandl d. Total5vvariable5vcosts5vincrease5vas5vthe5vacti
ers,5vand5vother5vfactory5vworkers5vthat5vcannot vity5vlevel5vincreases.
5vbe5vconveniently5vtraced 5vto5vparticular5vprodu
cts.5vThese5vlabor5vcosts5vare5vincurred5vto5vsup 1-6
port5vproduction,5vbut5vthe5vworkers5vinvolved5v a. Cost5vbehavior:5vCost5vbehavior5vrefers5vto5
do5vnot5vdirectly5vwork5von5vthe5vproduct. vthe5vway5vin5vwhich5vcosts5vchange5vin5vres
e. Manufacturing5voverhead5vincludes5vall5v ponse5vto5vchanges5vin5va5vmeasure5vof5vact
manufacturing5vcosts5vexcept5vdirect5vmaterials5v ivity5vsuch5vas5vsales5vvolume,5vproduction5v
and5vdirect5vlabor.5vConsequently,5vmanufacturi volume,5vor5vorders5vprocessed.
ng5voverhead5vincludes5vindirect5vmaterials5vand5vi b. Relevant5vrange:5vThe5vrelevant5vrange5vis5
ndirect5vlabor5vas5vwell5vas5vother5vmanufacturin vthe5vrange5vof5vactivity5vwithin5vwhich5vassu
g5vcosts. mptions5vabout5vvariable5vand5vfixed5vcost5v
behavior5vare5vvalid.
1-3
A5vproduct5vcost5vis5vany5vcost5vinvolved 1-7 An5vactivity5vbase5vis5va5vmeasure5vof
5vin5vpurchasing5vor5vmanufacturing5vgoods.5vIn5vt 5vwhatever5vcauses5vthe5vincurrence5vof5va5vvar
he5vcase5vof5vmanufactured5vgoods,5vthese5vcost iable5vcost.5vExamples5vof5vactivity5vbases5vincl
s5vconsist5vof5vdirect5vmaterials,5vdirect5vlabor,5van ude5vunits5vproduced,5vunits5vsold,5vletters5vty
d5vmanufacturing5voverhead.5vA5vperiod5vcost5vis5 ped,5vbeds5vin5va5vhospital,5vmeals5vserved5vin5v
va5vcost5vthat5vis5vtaken5vdirectly5vto5vthe5vincome a5vcafe,5vservice5vcalls5vmade,5vetc.
5vstatement5vas5van5vexpense5vin5vthe5vperiod5vin
5vwhich5vit5vis5vincurred. 1-8 The5vlinear5vassumption5vis5vreasonably
, valid5vproviding5vthat5vthe5vcost5vformula5vis5vuse
d5vonly5vwithin5vthe5vrelevant5vrange.
