Solution Manual for Managerial Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis
Chapter Ten: Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,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, a. Variable cost: The variable cost per unit is
direct 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 per unit varies inversely with changes in
conveniently traced to it. volume.
b. Indirect materials are generally small items c. Mixed cost: A mixed cost contains both
of material such as glue and nails. They may be an variable and fixed cost elements.
integral part of a finished product but their costs can
be traced to the product only at great cost or 1-5
inconvenience. a. Unit fixed costs decrease as the activity level
c. Direct labor consists of labor costs that increases.
can be easily traced to particular products. b. Unit variable costs remain constant as the
Direct labor is also called ―touch labor.‖ activity level increases.
d. Indirect labor consists of the labor costs of c. Total fixed costs remain constant as the
janitors, supervisors, materials handlers, and other activity level increases.
factory workers that cannot be conveniently traced d. Total variable costs increase as the activity
to particular products. These labor costs are level increases.
incurred to support production, but the workers
involved do not directly work on the product. 1-6
e. Manufacturing overhead includes all a. Cost behavior: Cost behavior refers to the way
manufacturing costs except direct materials and in which costs change in response to changes
direct labor. Consequently, manufacturing overhead in a measure of activity such as sales volume,
includes indirect materials and indirect labor as well production volume, or orders processed.
as other manufacturing costs. b. Relevant range: The relevant range is the
range of activity within which assumptions
1-3 A product cost is any cost involved in about variable and fixed cost behavior are
purchasing or manufacturing goods. In the case of valid.
manufactured goods, these costs consist of direct
materials, direct labor, and manufacturing overhead. 1-7 An activity base is a measure of
A period cost is a cost that is taken directly to the whatever causes the incurrence of a variable
income statement as an expense in the period in cost. Examples of activity bases include units
which it is incurred. 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.
18th Edition
By Ray Garrison, Eric Noreen and Peter Brewer
Verified Chapter's 1 - 16 | Complete
,Table of Contents
Chapter One: Managerial Accounting and Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets and Performance Analysis
Chapter Ten: Standard Costs and Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key to Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,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, a. Variable cost: The variable cost per unit is
direct 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 per unit varies inversely with changes in
conveniently traced to it. volume.
b. Indirect materials are generally small items c. Mixed cost: A mixed cost contains both
of material such as glue and nails. They may be an variable and fixed cost elements.
integral part of a finished product but their costs can
be traced to the product only at great cost or 1-5
inconvenience. a. Unit fixed costs decrease as the activity level
c. Direct labor consists of labor costs that increases.
can be easily traced to particular products. b. Unit variable costs remain constant as the
Direct labor is also called ―touch labor.‖ activity level increases.
d. Indirect labor consists of the labor costs of c. Total fixed costs remain constant as the
janitors, supervisors, materials handlers, and other activity level increases.
factory workers that cannot be conveniently traced d. Total variable costs increase as the activity
to particular products. These labor costs are level increases.
incurred to support production, but the workers
involved do not directly work on the product. 1-6
e. Manufacturing overhead includes all a. Cost behavior: Cost behavior refers to the way
manufacturing costs except direct materials and in which costs change in response to changes
direct labor. Consequently, manufacturing overhead in a measure of activity such as sales volume,
includes indirect materials and indirect labor as well production volume, or orders processed.
as other manufacturing costs. b. Relevant range: The relevant range is the
range of activity within which assumptions
1-3 A product cost is any cost involved in about variable and fixed cost behavior are
purchasing or manufacturing goods. In the case of valid.
manufactured goods, these costs consist of direct
materials, direct labor, and manufacturing overhead. 1-7 An activity base is a measure of
A period cost is a cost that is taken directly to the whatever causes the incurrence of a variable
income statement as an expense in the period in cost. Examples of activity bases include units
which it is incurred. 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.
