18th Edition
By Ray Solution Manual for Managerial
Accounting,
Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
h h
ChapterhOne:hManagerialhAccountinghandhCosthConcepts
ChapterhTwo:hJob-OrderhCosting:hCalculatinghUnithProducthCosts
ChapterhThree:hJob-OrderhCosting:hCosthFlowshandhExternalhReporting
ChapterhFour:hProcesshCosting
ChapterhFive:hCost-Volume-ProfithRelationships
ChapterhSix:hVariablehCostinghandhSegmenthReporting:hToolshforhManagement
ChapterhSeven:hActivity-BasedhCosting:hAhToolhtohAidhDecisionhMaking
ChapterhEight:hMasterhBudgeting
ChapterhNine:hFlexiblehBudgetshandhPerformancehAnalysis
ChapterhTen:hStandardhCostshandhVariances
ChapterhEleven:hResponsibilityhAccountinghSystems
ChapterhTwelve:hStrategichPerformancehMeasurement
ChapterhThirteen:hDifferentialhAnalysis:hThehKeyhtohDecisionhMaking
ChapterhFourteen:hCapitalhBudgetinghDecisions
ChapterhFifteen:hStatementhofhCashhFlows
ChapterhSixteen:hFinancialhStatementhAnalysis
,Chapter 1 h
Managerial Accounting and Cost Concepts
h h h h
Questions
1-1 Thehthreehmajorhtypeshofhproducthcostsh 1-4
inhahmanufacturinghcompanyharehdirecthmaterial a. Variablehcost:hThehvariablehcosthperhunithish
s,hdirecthlabor,handhmanufacturinghoverhead. constant,hbuthtotalhvariablehcosthchangeshinh
directhproportionhtohchangeshinhvolume.
1-2 b. Fixedhcost:hThehtotalhfixedhcosthishconstanthwi
a. Directhmaterialsharehanhintegralhparthofhah thinhthehrelevanthrange.hThehaveragehfixedhco
finishedhproducthandhtheirhcostshcanhbehconveni sthperhunithvarieshinverselyhwithhchangesh inhv
entlyhtracedhtohit. olume.
b. Indirecthmaterialsharehgenerallyhsmallhitem c. Mixedhcost:hAhmixedhcosthcontainshbothh
shofhmaterialhsuchhashgluehandhnails.hTheyhmayhb variablehandhfixedhcosthelements.
ehanhintegralhparthofhahfinishedhproducthbuththeirhc
ostshcanhbehtracedhtohthehproducthonlyhathgreathc 1-5
osthorhinconvenience. a. Unithfixedhcostshdecreasehashthehactivityhlevelh
c. Directhlaborhconsistshofhlaborhcostshthath increases.
canhbeheasilyhtracedhtohparticularhproducts. b. Unithvariablehcostshremainhconstanthashtheh
Directhlaborhishalsohcalledh―touchhlabor.‖ activityhlevelhincreases.
d. Indirecthlaborhconsistshofhthehlaborhcostsh c. Totalhfixedhcostshremainhconstanthashtheh
ofhjanitors,hsupervisors,hmaterialshhandlers,handh activityhlevelhincreases.
otherhfactoryhworkershthathcannothbehconvenien d. Totalhvariablehcostshincreasehashthehactivityh
tlyhtracedhtohparticularhproducts.hThesehlaborhco levelhincreases.
stsharehincurredhtohsupporthproduction,hbuththeh
workershinvolvedhdohnothdirectlyhworkhonhthehpr 1-6
oduct. a. Costhbehavior:hCosthbehaviorhrefershtohtheh
e. Manufacturinghoverheadhincludeshallhman wayhinhwhichhcostshchangehinhresponsehtohc
ufacturinghcostshexcepthdirecthmaterialshandhdire hangeshinhahmeasurehofhactivityhsuchhashsal
cthlabor.hConsequently,hmanufacturinghoverhead eshvolume,hproductionhvolume,horhordershpr
hincludeshindirecthmaterialshandhindirecthlaborhash ocessed.
wellhashotherhmanufacturinghcosts. b. Relevanthrange:hThehrelevanthrangehishtheh
rangehofhactivityhwithinhwhichhassumptionsh
1-3 abouthvariablehandhfixedhcosthbehaviorhareh
Ahproducthcosthishanyhcosthinvolvedhinhpu valid.
rchasinghorhmanufacturinghgoods.hInhthehcasehofh
manufacturedhgoods,hthesehcostshconsisthofhdire 1-7 Anhactivityhbasehishahmeasurehofhwha
cthmaterials,hdirecthlabor,handhmanufacturinghove teverhcauseshthehincurrencehofhahvariablehcost
rhead.hAhperiodhcosthishahcosththathishtakenhdirectl .hExampleshofhactivityhbaseshincludehunitshpro
yhtohthehincomehstatementhashanhexpensehinhtheh duced,hunitshsold,hlettershtyped,hbedshinhahhos
periodhinhwhichhithishincurred. pital,hmealshservedhinhahcafe,hservicehcallshma
de,hetc.
1-8 Thehlinearhassumptionhishreasonablyhvali
,dhprovidinghthaththehcosthformulahishusedhonlyhwi
thinhthehrelevanthrange.
, 1-9 Ahdiscretionaryhfixedhcosthhashahfairlyhs 1-11 Thehtraditionalhapproachhorganizeshcostsh
horthplanninghhorizon— byhfunction,hsuchhashproduction,hselling,handhad
usuallyhahyear.hSuchhcostsharisehfromhannualhd ministration.hWithinhahfunctionalharea,hfixedhandh
ecisionshbyhmanagementhtohspendhonhcertainhf variablehcostsharehintermingled.hThehcontribution
ixedhcosthitems,hsuchhashadvertising,hresearch, happroachhincomehstatementhorganizeshcostshbyh
handhmanagementhdevelopment.hAhcommitted h behavior,hfirsthdeductinghvariablehexpenseshtohob
fixedhcosthhashahlonghplanninghhorizon— tainhcontributionhmargin,handhthenhdeductinghfixe
generallyhmanyhyears.hSuchhcostshrelatehtohahc dhexpenseshtohobtainhnethoperatinghincome.
ompany’shinvestmenthinhfacilities,hequipment,h
andhbasichorganization.hOncehsuchhcostshhaveh 1-12 Thehcontributionhmarginhishtotalhsalesh
beenhincurred,htheyhareh―lockedhin‖hforhmanyhy revenuehlesshtotalhvariablehexpenses.
ears.
1-13 Ahdifferentialhcosthishahcosththathdiffershbe
1-10 Yes.hAshthehanticipatedhlevelhofhactivityhc tweenhalternativeshinhahdecision.hAhsunkhcosth ishah
hanges,hthehlevelhofhfixedhcostshneededhtohsuppo cosththathhashalreadyhbeenhincurredhandhcannothb
rthoperationshmayhalsohchange.hMosthfixedhcostsh ehalteredhbyhanyhdecisionhtakenhnowhorhinhthehfut
arehadjustedhupwardhandhdownwardhinhlargehste ure.hAnhopportunityhcosthishthehpotentialhbenefitht
ps,hratherhthanhbeinghabsolutelyhfixedhathonehlevel hathishgivenhuphwhenhonehalternativehishselectedho
hforhallhrangeshofhactivity. verhanother.
1-14 No,hdifferentialhcostshcanhbeheitherhvaria
blehorhfixed.hForhexample,hthehalternativeshmight
hconsisthofhpurchasinghonehmachinehrather hthanh
anotherhtohmakehahproduct.hThehdifferencehbetw
eenhthehfixedhcostshofhpurchasinghthehtwohmachi
neshishahdifferentialhcost.
ManagerialhAccountingh18thhEdition,hSolutionshManual,
,Chapter 1: Applying Excel
h h h
The completed worksheet is shown below.
h h h h h
ManagerialhAccountingh18thhEdition,hSolutionshManual,hChapterh1 3
, Chapter 1: Applying Excel (continued)
h h h h
The completed worksheet, with formulas displayed, is shown below.
h h h h h h h h
[Note: To display formulas in cells instead of their calculated amounts, consult E
h h h h h h h h h h h h
xcel Help.]
h
.
ManagerialhAccountingh18thhEdition,hSolutionshManual,hChapterh1
By Ray Solution Manual for Managerial
Accounting,
Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
h h
ChapterhOne:hManagerialhAccountinghandhCosthConcepts
ChapterhTwo:hJob-OrderhCosting:hCalculatinghUnithProducthCosts
ChapterhThree:hJob-OrderhCosting:hCosthFlowshandhExternalhReporting
ChapterhFour:hProcesshCosting
ChapterhFive:hCost-Volume-ProfithRelationships
ChapterhSix:hVariablehCostinghandhSegmenthReporting:hToolshforhManagement
ChapterhSeven:hActivity-BasedhCosting:hAhToolhtohAidhDecisionhMaking
ChapterhEight:hMasterhBudgeting
ChapterhNine:hFlexiblehBudgetshandhPerformancehAnalysis
ChapterhTen:hStandardhCostshandhVariances
ChapterhEleven:hResponsibilityhAccountinghSystems
ChapterhTwelve:hStrategichPerformancehMeasurement
ChapterhThirteen:hDifferentialhAnalysis:hThehKeyhtohDecisionhMaking
ChapterhFourteen:hCapitalhBudgetinghDecisions
ChapterhFifteen:hStatementhofhCashhFlows
ChapterhSixteen:hFinancialhStatementhAnalysis
,Chapter 1 h
Managerial Accounting and Cost Concepts
h h h h
Questions
1-1 Thehthreehmajorhtypeshofhproducthcostsh 1-4
inhahmanufacturinghcompanyharehdirecthmaterial a. Variablehcost:hThehvariablehcosthperhunithish
s,hdirecthlabor,handhmanufacturinghoverhead. constant,hbuthtotalhvariablehcosthchangeshinh
directhproportionhtohchangeshinhvolume.
1-2 b. Fixedhcost:hThehtotalhfixedhcosthishconstanthwi
a. Directhmaterialsharehanhintegralhparthofhah thinhthehrelevanthrange.hThehaveragehfixedhco
finishedhproducthandhtheirhcostshcanhbehconveni sthperhunithvarieshinverselyhwithhchangesh inhv
entlyhtracedhtohit. olume.
b. Indirecthmaterialsharehgenerallyhsmallhitem c. Mixedhcost:hAhmixedhcosthcontainshbothh
shofhmaterialhsuchhashgluehandhnails.hTheyhmayhb variablehandhfixedhcosthelements.
ehanhintegralhparthofhahfinishedhproducthbuththeirhc
ostshcanhbehtracedhtohthehproducthonlyhathgreathc 1-5
osthorhinconvenience. a. Unithfixedhcostshdecreasehashthehactivityhlevelh
c. Directhlaborhconsistshofhlaborhcostshthath increases.
canhbeheasilyhtracedhtohparticularhproducts. b. Unithvariablehcostshremainhconstanthashtheh
Directhlaborhishalsohcalledh―touchhlabor.‖ activityhlevelhincreases.
d. Indirecthlaborhconsistshofhthehlaborhcostsh c. Totalhfixedhcostshremainhconstanthashtheh
ofhjanitors,hsupervisors,hmaterialshhandlers,handh activityhlevelhincreases.
otherhfactoryhworkershthathcannothbehconvenien d. Totalhvariablehcostshincreasehashthehactivityh
tlyhtracedhtohparticularhproducts.hThesehlaborhco levelhincreases.
stsharehincurredhtohsupporthproduction,hbuththeh
workershinvolvedhdohnothdirectlyhworkhonhthehpr 1-6
oduct. a. Costhbehavior:hCosthbehaviorhrefershtohtheh
e. Manufacturinghoverheadhincludeshallhman wayhinhwhichhcostshchangehinhresponsehtohc
ufacturinghcostshexcepthdirecthmaterialshandhdire hangeshinhahmeasurehofhactivityhsuchhashsal
cthlabor.hConsequently,hmanufacturinghoverhead eshvolume,hproductionhvolume,horhordershpr
hincludeshindirecthmaterialshandhindirecthlaborhash ocessed.
wellhashotherhmanufacturinghcosts. b. Relevanthrange:hThehrelevanthrangehishtheh
rangehofhactivityhwithinhwhichhassumptionsh
1-3 abouthvariablehandhfixedhcosthbehaviorhareh
Ahproducthcosthishanyhcosthinvolvedhinhpu valid.
rchasinghorhmanufacturinghgoods.hInhthehcasehofh
manufacturedhgoods,hthesehcostshconsisthofhdire 1-7 Anhactivityhbasehishahmeasurehofhwha
cthmaterials,hdirecthlabor,handhmanufacturinghove teverhcauseshthehincurrencehofhahvariablehcost
rhead.hAhperiodhcosthishahcosththathishtakenhdirectl .hExampleshofhactivityhbaseshincludehunitshpro
yhtohthehincomehstatementhashanhexpensehinhtheh duced,hunitshsold,hlettershtyped,hbedshinhahhos
periodhinhwhichhithishincurred. pital,hmealshservedhinhahcafe,hservicehcallshma
de,hetc.
1-8 Thehlinearhassumptionhishreasonablyhvali
,dhprovidinghthaththehcosthformulahishusedhonlyhwi
thinhthehrelevanthrange.
, 1-9 Ahdiscretionaryhfixedhcosthhashahfairlyhs 1-11 Thehtraditionalhapproachhorganizeshcostsh
horthplanninghhorizon— byhfunction,hsuchhashproduction,hselling,handhad
usuallyhahyear.hSuchhcostsharisehfromhannualhd ministration.hWithinhahfunctionalharea,hfixedhandh
ecisionshbyhmanagementhtohspendhonhcertainhf variablehcostsharehintermingled.hThehcontribution
ixedhcosthitems,hsuchhashadvertising,hresearch, happroachhincomehstatementhorganizeshcostshbyh
handhmanagementhdevelopment.hAhcommitted h behavior,hfirsthdeductinghvariablehexpenseshtohob
fixedhcosthhashahlonghplanninghhorizon— tainhcontributionhmargin,handhthenhdeductinghfixe
generallyhmanyhyears.hSuchhcostshrelatehtohahc dhexpenseshtohobtainhnethoperatinghincome.
ompany’shinvestmenthinhfacilities,hequipment,h
andhbasichorganization.hOncehsuchhcostshhaveh 1-12 Thehcontributionhmarginhishtotalhsalesh
beenhincurred,htheyhareh―lockedhin‖hforhmanyhy revenuehlesshtotalhvariablehexpenses.
ears.
1-13 Ahdifferentialhcosthishahcosththathdiffershbe
1-10 Yes.hAshthehanticipatedhlevelhofhactivityhc tweenhalternativeshinhahdecision.hAhsunkhcosth ishah
hanges,hthehlevelhofhfixedhcostshneededhtohsuppo cosththathhashalreadyhbeenhincurredhandhcannothb
rthoperationshmayhalsohchange.hMosthfixedhcostsh ehalteredhbyhanyhdecisionhtakenhnowhorhinhthehfut
arehadjustedhupwardhandhdownwardhinhlargehste ure.hAnhopportunityhcosthishthehpotentialhbenefitht
ps,hratherhthanhbeinghabsolutelyhfixedhathonehlevel hathishgivenhuphwhenhonehalternativehishselectedho
hforhallhrangeshofhactivity. verhanother.
1-14 No,hdifferentialhcostshcanhbeheitherhvaria
blehorhfixed.hForhexample,hthehalternativeshmight
hconsisthofhpurchasinghonehmachinehrather hthanh
anotherhtohmakehahproduct.hThehdifferencehbetw
eenhthehfixedhcostshofhpurchasinghthehtwohmachi
neshishahdifferentialhcost.
ManagerialhAccountingh18thhEdition,hSolutionshManual,
,Chapter 1: Applying Excel
h h h
The completed worksheet is shown below.
h h h h h
ManagerialhAccountingh18thhEdition,hSolutionshManual,hChapterh1 3
, Chapter 1: Applying Excel (continued)
h h h h
The completed worksheet, with formulas displayed, is shown below.
h h h h h h h h
[Note: To display formulas in cells instead of their calculated amounts, consult E
h h h h h h h h h h h h
xcel Help.]
h
.
ManagerialhAccountingh18thhEdition,hSolutionshManual,hChapterh1
