Solution Manual for Managerial Accounting, 18th Edition
by Ray Garrison, Eric Noreen and Peter Brewer
Verified ALL Chapter's 1 - 16 | Complete
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Chapter 1
Managerial Accounting and Cost Concepts
Questions
materials, direct labor, and
1-1 The three major types of manufacturing overhead. A period
product costs in amanu facturing cost is a cost that is taken directly to
company are direct materials, the income statement as an expense
direct labor, and manufacturing in the period in which it is incurred.
overhead.
1-2
a. Direct materials are an integral part of a
finished product and their
costs can be conveniently
traced to it.
b. Indirect materials are generally
small items of material such as glue
and nails. They may be an integral
part of a finished product but their
costs can be traced to the product
only at great cost or inconvenience.
c. Direct labor consists of labor
costs that can be easily traced
to particular products.
Direct labor is also called ―touch labor.‖
d. Indirect labor consists of the
labor costs of janitors, supervisors,
materials handlers, and other
factory workers that cannot be
conveniently traced toparticular
,products. These labor costs are
incurred to support production, but
the workers involved do not directly
work on the product.
e. Manufacturing overhead
includes all manufacturing costs
except direct materials and
directlabor. Consequently,
manufacturing overhead
includesindirect materials and
indirect labor as well as other
manufacturing costs.
1-3 A product cost is any cost
involved in purchasing or
manufacturing goods. In the case
of manufactured goods, these
costs consist of direct
,1-4
a. Variable cost: The variable
cost per unit is constant, but
total variable cost changes in
direct proportion to changes
in volume.
b. Fixed cost: The total fixed cost
is constant within the relevant
range. The averagefixed cost
per unit varies inversely with
changes in volume.
c. Mixed cost: A mixed
cost contains both
variable and fixed cost
elements.
1-5
a. Unit fixed costs decrease as
the activity levelincreases.
b. Unit variable costs remain
constant as theactivity
level increases.
c. Total fixed costs remain
constant as theactivity
level increases.
d. Total variable costs increase
as the activity levelincreases.
1-6
a. Cost behavior: Cost behavior
refers to the way in which
costs change in response to
changes ina measure of
activity such as sales volume,
production volume, or orders
processed.
b. Relevant range: The relevant
range is the range of activity
within which assumptions
about variable and fixed cost
behavior are valid.
1-7 An activity base is a
measure of whatevercauses
the incurrence of a variable
cost. Examples of activity
bases include units 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 onlywithin the
relevant range.
by Ray Garrison, Eric Noreen and Peter Brewer
Verified ALL Chapter's 1 - 16 | Complete
TO GET FULL TEST BANK & SOLUTIONS MANUAL
EMAIL ME AT
mailto:
Chapter 1
Managerial Accounting and Cost Concepts
Questions
materials, direct labor, and
1-1 The three major types of manufacturing overhead. A period
product costs in amanu facturing cost is a cost that is taken directly to
company are direct materials, the income statement as an expense
direct labor, and manufacturing in the period in which it is incurred.
overhead.
1-2
a. Direct materials are an integral part of a
finished product and their
costs can be conveniently
traced to it.
b. Indirect materials are generally
small items of material such as glue
and nails. They may be an integral
part of a finished product but their
costs can be traced to the product
only at great cost or inconvenience.
c. Direct labor consists of labor
costs that can be easily traced
to particular products.
Direct labor is also called ―touch labor.‖
d. Indirect labor consists of the
labor costs of janitors, supervisors,
materials handlers, and other
factory workers that cannot be
conveniently traced toparticular
,products. These labor costs are
incurred to support production, but
the workers involved do not directly
work on the product.
e. Manufacturing overhead
includes all manufacturing costs
except direct materials and
directlabor. Consequently,
manufacturing overhead
includesindirect materials and
indirect labor as well as other
manufacturing costs.
1-3 A product cost is any cost
involved in purchasing or
manufacturing goods. In the case
of manufactured goods, these
costs consist of direct
,1-4
a. Variable cost: The variable
cost per unit is constant, but
total variable cost changes in
direct proportion to changes
in volume.
b. Fixed cost: The total fixed cost
is constant within the relevant
range. The averagefixed cost
per unit varies inversely with
changes in volume.
c. Mixed cost: A mixed
cost contains both
variable and fixed cost
elements.
1-5
a. Unit fixed costs decrease as
the activity levelincreases.
b. Unit variable costs remain
constant as theactivity
level increases.
c. Total fixed costs remain
constant as theactivity
level increases.
d. Total variable costs increase
as the activity levelincreases.
1-6
a. Cost behavior: Cost behavior
refers to the way in which
costs change in response to
changes ina measure of
activity such as sales volume,
production volume, or orders
processed.
b. Relevant range: The relevant
range is the range of activity
within which assumptions
about variable and fixed cost
behavior are valid.
1-7 An activity base is a
measure of whatevercauses
the incurrence of a variable
cost. Examples of activity
bases include units 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 onlywithin the
relevant range.
