Solution Manual for Managerial Accounting, 18th Edition By Ray Garrison, Eric Noreen and Peter Brewer, Verified Chapters 1 - 16, Complete Newest Version

Solution Manual for
Managerial Accounting,18th Edition
By Ray Garrison, Eric Noreen and Peter
Brewer
Verified Chapter's 1 - 16 | Complete

,Table of Contents
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Chapter One: Managerial Accounting and Cost Concepts
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Chapter Two: Job-Order Costing: Calculating Unit Product Costs
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Chapter Three: Job-Order Costing: Cost Flows and External Reporting
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Chapter Four: Process Costing
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Chapter Five: Cost-Volume-Profit Relationships
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Chapter Six: Variable Costing and Segment Reporting: Tools for Management
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Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
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Chapter Eight: Master Budgeting
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Chapter Nine: Flexible Budgets and Performance Analysis
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Chapter Ten: Standard Costs and Variances
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Chapter Eleven: Responsibility Accounting Systems
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Chapter Twelve: Strategic Performance Measurement
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Chapter Thirteen: Differential Analysis: The Key to Decision Making
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Chapter Fourteen: Capital Budgeting Decisions
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Chapter Fifteen: Statement of Cash Flows
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Chapter Sixteen: Financial Statement Analysis
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,Chapter 1 tj




Managerial Accounting and Cost Concepts tj tj tj tj




Questions

1-1 The three major types of product costs in a m tj tj tj tj tj tj tj tj tj 1-4
anufacturing company are direct materials, direct lab tj tj tj tj tj tj a. Variable cost: The variable cost per unit is const tj tj tj tj tj tj tj tj


or, and manufacturing overhead.
tj tj tj ant, but total variable cost changes in direct propo
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rtion to changes in volume. tj tj tj tj


1-2 b. Fixed cost: The total fixed cost is constant within t tj tj tj tj tj tj tj tj tj


a. Direct materials are an integral part of a finish tj tj tj tj tj tj tj tj he relevant range. The averagefixed cost per unit v
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ed product and their costs can be conveniently traced
tj tj tj tj tj tj tj tj tj aries inversely with changes in volume. tj tj tj t j tj


to it. tj c. Mixed cost: A mixed cost contains both varia tj tj tj tj tj tj tj


b. Indirect materials are generally small items of tj tj tj tj tj tj tj ble and fixed cost elements. tj tj tj tj


material such as glue and nails. They may be an integral tj tj tj tj tj tj tj tj tj tj


part of a finished product but their costs can be traced to
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the product only at great cost or inconvenience.
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a. Unit fixed costs decrease as the activity level increa
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c. Direct labor consists of labor costs that can b tj tj tj tj tj tj tj tj ses.
e easily traced to particular products.
tj tj tj tj tj b. Unit variable costs remain constant as the activit tj tj tj tj tj tj tj


Direct labor is also called ―touch labor.‖ tj tj tj tj tj tj y level increases. tj tj


d. Indirect labor consists of the labor costs of jan tj tj tj tj tj tj tj tj c. Total fixed costs remain constant as the activit tj tj tj tj tj tj tj


itors, supervisors, materials handlers, and other factor
tj tj tj tj tj tj y level increases. tj tj


y workers that cannot be conveniently traced to partic
tj tj tj tj tj tj tj tj d. Total variable costs increase as the activity level i tj tj tj tj tj tj tj tj


ular products. These labor costs are incurred to suppo
tj tj tj tj tj tj tj tj ncreases.
rt production, but the workers involved do not directl
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y work on the product.
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1-6
e. Manufacturing overhead includes all manufact tj tj tj tj
a. Cost behavior: Cost behavior refers to the way in tj tj tj tj tj tj tj tj


uring costs except direct materials and direct labor. Co
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which costs change in response to changes in a
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nsequently, manufacturing overhead includes indirect tj tj tj tj tj
measure of activity such as sales volume, product tj tj tj tj tj tj tj

materials and indirect labor as well as other manufactu tj tj tj tj tj tj tj tj
ion volume, or orders processed. tj tj tj tj

ring costs. tj
b. Relevant range: The relevant range is the range tj tj tj tj tj tj tj tj


of activity within which assumptions about varia
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1-3 ble and fixed cost behavior are valid.
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A product cost is any cost involved in purcha tj tj tj tj tj tj tj tj


sing or manufacturing goods. In the case of manufactur
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1-7 An activity base is a measure of whatever tj tj tj tj tj tj tj tj

ed goods, these costs consist of direct materials, direct l
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causes the incurrence of a variable cost. Examples o
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abor, and manufacturing overhead. A period cost is a c
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f activity bases include units produced, units sold, l
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ost that is taken directly to the income statement as an
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etters typed, beds in a hospital, meals served in a caf
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expense in the period in which it is incurred. tj tj tj tj tj tj tj tj
e, service calls made, etc.
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1-8 The linear assumption is reasonably valid pro tj tj tj tj tj tj


viding that the cost formula is used only within the relev
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ant range.tj

, 1-9 A discretionary fixed cost has a fairly short tj tj tj tj tj tj tj 1-11 The traditionalapproach organizescosts by fu tj tj tj tj tj tj


planning horizon—
tj tj nction, such as production, selling, and administration
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usually a year. Such costs arise from annual decisio
tj tj tj tj tj tj tj tj . Within a functional area, fixed and variable costs are i
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ns by management to spend on certain fixed cost ite
tj tj tj tj tj tj tj tj tj ntermingled. The contribution approach income state tj tj tj tj tj


ms, such as advertising, research, and management
tj tj tj tj tj tj tj ment organizes costs by behavior, first deducting varia
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development. A committed fixed cost has a long plan tj tj tj tj tj tj tj tj ble expenses to obtain contribution margin, and then de
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ning horizon— tj ducting fixed expenses to obtain net operating income.
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generally many years. Such costs relate to a compan tj tj tj tj tj tj tj tj


y’s investment in facilities, equipment, and basic or
tj tj tj tj tj tj tj 1-12 The contribution margin is total sales reve tj tj tj tj tj tj


ganization. Once such costs have been incurred, the tj tj tj tj tj tj tj nue less total variable expenses.
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y are ―locked in‖ for many years.
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1-13 A differential cost is a cost that differs betwee tj tj tj tj tj tj tj tj


1-10 Yes. As the anticipated level of activity chan tj tj tj tj tj tj tj n alternatives in a decision. A sunk cost is a cost that h
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ges, the level of fixed costs needed to support operatio
tj tj tj tj tj tj tj tj tj as already been incurred and cannot be altered by any d
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ns may also change. Most fixed costs are adjusted upw
tj tj tj tj tj tj tj tj tj ecision taken now or in the future. An opportunity cost i
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ard and downward in large steps, rather than being abso
tj tj tj tj tj tj tj tj tj s the potential benefit that is given up when one alternat
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lutely fixed at one level for all ranges of activity.
tj tj tj tj tj tj tj tj tj ive is selected over another.
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1-14 No, differential costs can be either variable o tj tj tj tj tj tj tj


r fixed. For example, the alternatives might consist of
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purchasing one machine rather than another to make a tj tj tj tj tj tj tj tj tj


product. The difference between the fixed costs of pur
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chasing the two machines is a differential cost.
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Managerial Accounting 18th Edition, Solutions Manual, tj tj tj tj tj