SOLUTION MANUAL FOR
Managerial accounting
by Ray H. Garrison, Eric W. Noreen
17th Edition
Solutions Manual, Chapter 1 1
, Chapter 1
Managerial Accounting And Cost Concepts
Questions
1-1 The Three Major Types Of Product Costs In 1-4
A Manufacturing Company Are Direct Materials, Direct a. Variable Cost: The Variable Cost Per Unit Is
Labor, And Manufacturing Overhead. Constant, But Total Variable Cost Changes In
Direct Proportion To Changes In Volume.
1-2 b. Fixed Cost: The Total Fixed Cost Is Constant
a. Direct Materials Are An Integral Part Of A Within The Relevant Range. The Average Fixed Cost
Finished Product And Their Costs Can Be Conveniently Per Unit Varies Inversely With Changes In Volume.
Traced To It. c. Mixed Cost: A Mixed Cost Contains Both
b. Indirect Materials Are Generally Small Items Of Variable And Fixed Cost Elements.
Material Such As Glue And Nails. They May Be An
Integral Part Of A Finished Product But Their Costs Can 1-5
Be Traced To The Product Only At Great Cost Or a. Unit Fixed Costs Decrease As The Activity Level
Inconvenience. Increases.
c. Direct Labor Consists Of Labor Costs That b. Unit Variable Costs Remain Constant As The
Can Be Easily Traced To Particular Products. Activity Level Increases.
Direct Labor Is Also Called ―Touch Labor.‖ c. Total Fixed Costs Remain Constant As The
d. Indirect Labor Consists Of The Labor Costs Of Activity Level Increases.
Janitors, Supervisors, Materials Handlers, And Other d. Total Variable Costs Increase As The Activity Level
Factory Workers That Cannot Be Conveniently Traced Increases.
To Particular Products. These Labor Costs Are Incurred
To Support Production, But The Workers Involved Do 1-6
Not Directly Work On The Product.
a. Cost Behavior: Cost Behavior Refers To The Way
e. Manufacturing Overhead Includes All In Which Costs Change In Response To Changes
Manufacturing Costs Except Direct Materials And Direct In A Measure Of Activity Such As Sales Volume,
Labor. Consequently, Manufacturing Overhead Includes Production Volume, Or Orders Processed.
Indirect Materials And Indirect Labor As Well As Other
b. Relevant Range: The Relevant Range Is The
Manufacturing Costs.
Range Of Activity Within Which Assumptions
About Variable And Fixed Cost Behavior Are
1-3 A Product Cost Is Any Cost Involved In
Valid.
Purchasing Or Manufacturing Goods. In The Case Of
Manufactured Goods, These Costs Consist Of Direct
Materials, Direct Labor, And Manufacturing Overhead. A 1-7 An Activity Base Is A Measure Of Whatever
Period Cost Is A Cost That Is Taken Directly To The Causes The Incurrence Of A Variable Cost. Examples
Income Statement As An Expense In The Period In Of Activity Bases Include Units Produced, Units Sold,
Which It Is Incurred. 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.
Copyright 2021 © Mcgraw-Hill Education. All Rights Reserved. No Reproduction Or Distribution Without The Prior
Written Consent Of Mcgraw-Hill Education.
2 Managerial Accounting, 17th edition
, 1-9 A Discretionary Fixed Cost Has A Fairly 1-11 The Traditional Approach Organizes Costs By
Short Planning Horizon—Usually A Year. Such Costs Function, Such As Production, Selling, And
Arise From Annual Decisions By Management To Administration. Within A Functional Area, Fixed And
Spend On Certain Fixed Cost Items, Such As Variable Costs Are Intermingled. The Contribution
Advertising, Research, And Management Development. Approach Income Statement Organizes Costs By Behavior,
A Committed Fixed Cost Has A Long Planning First Deducting Variable Expenses To Obtain
Horizon—Generally Many Years. Such Costs Relate Contribution Margin, And Then Deducting Fixed
To A Company’s Investment In Facilities, Equipment, Expenses To Obtain Net Operating Income.
And Basic Organization. Once Such Costs Have Been
Incurred, They Are ―Locked In‖ For Many Years. 1-12 The Contribution Margin Is Total Sales
Revenue Less Total Variable Expenses.
1-10 Yes. As The Anticipated Level Of Activity
Changes, The Level Of Fixed Costs Needed To Support 1-13 A Differential Cost Is A Cost That Differs
Operations May Also Change. Most Fixed Costs Are Between Alternatives In A Decision. An Opportunity
Adjusted Upward And Downward In Large Steps, Rather Cost Is The Potential Benefit That Is Given Up When
Than Being Absolutely Fixed At One Level For All Ranges One Alternative Is Selected Over Another. A Sunk Cost
Of Activity. 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 Another To
Make A Product. The Difference Between The Fixed
Costs Of Purchasing The Two Machines Is A
Differential Cost.
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 3
,
Managerial accounting
by Ray H. Garrison, Eric W. Noreen
17th Edition
Solutions Manual, Chapter 1 1
, Chapter 1
Managerial Accounting And Cost Concepts
Questions
1-1 The Three Major Types Of Product Costs In 1-4
A Manufacturing Company Are Direct Materials, Direct a. Variable Cost: The Variable Cost Per Unit Is
Labor, And Manufacturing Overhead. Constant, But Total Variable Cost Changes In
Direct Proportion To Changes In Volume.
1-2 b. Fixed Cost: The Total Fixed Cost Is Constant
a. Direct Materials Are An Integral Part Of A Within The Relevant Range. The Average Fixed Cost
Finished Product And Their Costs Can Be Conveniently Per Unit Varies Inversely With Changes In Volume.
Traced To It. c. Mixed Cost: A Mixed Cost Contains Both
b. Indirect Materials Are Generally Small Items Of Variable And Fixed Cost Elements.
Material Such As Glue And Nails. They May Be An
Integral Part Of A Finished Product But Their Costs Can 1-5
Be Traced To The Product Only At Great Cost Or a. Unit Fixed Costs Decrease As The Activity Level
Inconvenience. Increases.
c. Direct Labor Consists Of Labor Costs That b. Unit Variable Costs Remain Constant As The
Can Be Easily Traced To Particular Products. Activity Level Increases.
Direct Labor Is Also Called ―Touch Labor.‖ c. Total Fixed Costs Remain Constant As The
d. Indirect Labor Consists Of The Labor Costs Of Activity Level Increases.
Janitors, Supervisors, Materials Handlers, And Other d. Total Variable Costs Increase As The Activity Level
Factory Workers That Cannot Be Conveniently Traced Increases.
To Particular Products. These Labor Costs Are Incurred
To Support Production, But The Workers Involved Do 1-6
Not Directly Work On The Product.
a. Cost Behavior: Cost Behavior Refers To The Way
e. Manufacturing Overhead Includes All In Which Costs Change In Response To Changes
Manufacturing Costs Except Direct Materials And Direct In A Measure Of Activity Such As Sales Volume,
Labor. Consequently, Manufacturing Overhead Includes Production Volume, Or Orders Processed.
Indirect Materials And Indirect Labor As Well As Other
b. Relevant Range: The Relevant Range Is The
Manufacturing Costs.
Range Of Activity Within Which Assumptions
About Variable And Fixed Cost Behavior Are
1-3 A Product Cost Is Any Cost Involved In
Valid.
Purchasing Or Manufacturing Goods. In The Case Of
Manufactured Goods, These Costs Consist Of Direct
Materials, Direct Labor, And Manufacturing Overhead. A 1-7 An Activity Base Is A Measure Of Whatever
Period Cost Is A Cost That Is Taken Directly To The Causes The Incurrence Of A Variable Cost. Examples
Income Statement As An Expense In The Period In Of Activity Bases Include Units Produced, Units Sold,
Which It Is Incurred. 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.
Copyright 2021 © Mcgraw-Hill Education. All Rights Reserved. No Reproduction Or Distribution Without The Prior
Written Consent Of Mcgraw-Hill Education.
2 Managerial Accounting, 17th edition
, 1-9 A Discretionary Fixed Cost Has A Fairly 1-11 The Traditional Approach Organizes Costs By
Short Planning Horizon—Usually A Year. Such Costs Function, Such As Production, Selling, And
Arise From Annual Decisions By Management To Administration. Within A Functional Area, Fixed And
Spend On Certain Fixed Cost Items, Such As Variable Costs Are Intermingled. The Contribution
Advertising, Research, And Management Development. Approach Income Statement Organizes Costs By Behavior,
A Committed Fixed Cost Has A Long Planning First Deducting Variable Expenses To Obtain
Horizon—Generally Many Years. Such Costs Relate Contribution Margin, And Then Deducting Fixed
To A Company’s Investment In Facilities, Equipment, Expenses To Obtain Net Operating Income.
And Basic Organization. Once Such Costs Have Been
Incurred, They Are ―Locked In‖ For Many Years. 1-12 The Contribution Margin Is Total Sales
Revenue Less Total Variable Expenses.
1-10 Yes. As The Anticipated Level Of Activity
Changes, The Level Of Fixed Costs Needed To Support 1-13 A Differential Cost Is A Cost That Differs
Operations May Also Change. Most Fixed Costs Are Between Alternatives In A Decision. An Opportunity
Adjusted Upward And Downward In Large Steps, Rather Cost Is The Potential Benefit That Is Given Up When
Than Being Absolutely Fixed At One Level For All Ranges One Alternative Is Selected Over Another. A Sunk Cost
Of Activity. 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 Another To
Make A Product. The Difference Between The Fixed
Costs Of Purchasing The Two Machines Is A
Differential Cost.
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 3
,
