Solution Manual for Managerial Accounting, 18th Edition B
tr tr tr tr tr tr tr
y Ray Garrison, Eric Noreen and Peter Brewer Verified Ch
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apter's 1 – 16 Complete
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,Table of Contents
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ChaptertrOne:trManagerialtrAccountingtrandtrCosttrConcepts
ChaptertrTwo:trJob-OrdertrCosting:trCalculatingtrUnittrProducttrCosts
ChaptertrThree:trJob-OrdertrCosting:trCosttrFlowstrandtrExternaltrReporting
ChaptertrFour:trProcesstrCosting
ChaptertrFive:trCost-Volume-ProfittrRelationships
ChaptertrSix:trVariabletrCostingtrandtrSegmenttrReporting:trToolstrfortrManagement
ChaptertrSeven:trActivity-BasedtrCosting:trAtrTooltrtotrAidtrDecisiontrMaking
ChaptertrEight:trMastertrBudgeting
ChaptertrNine:trFlexibletrBudgetstrandtrPerformancetrAnalysis
ChaptertrTen:trStandardtrCoststrandtrVariances
ChaptertrEleven:trResponsibilitytrAccountingtrSystems
ChaptertrTwelve:trStrategictrPerformancetrMeasurement
ChaptertrThirteen:trDifferentialtrAnalysis:trThetrKeytrtotrDecisiontrMaking
ChaptertrFourteen:trCapitaltrBudgetingtrDecisions
ChaptertrFifteen:trStatementtroftrCashtrFlows
ChaptertrSixteen:trFinancialtrStatementtrAnalysis
,Chapter 1 tr
Managerial Accounting and Cost Concepts
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Questions
1-1 Thetrthreetrmajortrtypestroftrproducttrcostst 1-4
rintratrmanufacturingtrcompanytraretrdirecttrmateri a. Variabletrcost:trThetrvariabletrcosttrpertrunittrist
als,trdirecttrlabor,trandtrmanufacturingtroverhead. rconstant,trbuttrtotaltrvariabletrcosttrchangestrin
trdirecttrproportiontrtotrchangestrintrvolume.
1-2 b. Fixedtrcost:trThetrtotaltrfixedtrcosttristrconstanttr
a. Directtrmaterialstraretrantrintegraltrparttroftra withintrthetrrelevanttrrange.trThetraveragetrfixedtr
trfinishedtrproducttrandtrtheirtrcoststrcantrbetrconve costtrpertrunittrvariestrinverselytrwithtrchangest
nientlytrtracedtrtotrit. r intrvolume.
b. Indirecttrmaterialstraretrgenerallytrsmalltrite c. Mixedtrcost:trAtrmixedtrcosttrcontainstrbotht
mstroftrmaterialtrsuchtrastrgluetrandtrnails.trTheytrma rvariabletrandtrfixedtrcosttrelements.
ytrbetrantrintegraltrparttroftratrfinishedtrproducttrbuttrth
eirtrcoststrcantrbetrtracedtrtotrthetrproducttronlytrattrgr 1-5
eattrcosttrortrinconvenience. a. Unittrfixedtrcoststrdecreasetrastrthetractivitytrlevelt
c. Directtrlabortrconsiststroftrlabortrcoststrthatt rincreases.
rcantrbetreasilytrtracedtrtotrparticulartrproducts. b. Unittrvariabletrcoststrremaintrconstanttrastrthet
Directtrlabortristralsotrcalledtr―touchtrlabor.‖ ractivitytrleveltrincreases.
d. Indirecttrlabortrconsiststroftrthetrlabortrcosts c. Totaltrfixedtrcoststrremaintrconstanttrastrthet
troftrjanitors,trsupervisors,trmaterialstrhandlers,tran ractivitytrleveltrincreases.
dtrothertrfactorytrworkerstrthattrcannottrbetrconven d. Totaltrvariabletrcoststrincreasetrastrthetractivityt
ientlytrtracedtrtotrparticulartrproducts.trThesetrlabo rleveltrincreases.
rtrcoststraretrincurredtrtotrsupporttrproduction,trbutt
rthetrworkerstrinvolvedtrdotrnottrdirectlytrworktrontrt 1-6
hetrproduct. a. Costtrbehavior:trCosttrbehaviortrreferstrtotrthetr
e. Manufacturingtroverheadtrincludestralltrman waytrintrwhichtrcoststrchangetrintrresponsetrtotr
ufacturingtrcoststrexcepttrdirecttrmaterialstrandtrdir changestrintratrmeasuretroftractivitytrsuchtrastrs
ecttrlabor.trConsequently,trmanufacturingtroverhe alestrvolume,trproductiontrvolume,trortrorderstr
adtrincludestrindirecttrmaterialstrandtrindirecttrlabortr processed.
astrwelltrastrothertrmanufacturingtrcosts. b. Relevanttrrange:trThetrrelevanttrrangetristrthe
trrangetroftractivitytrwithintrwhichtrassumption
1-3 strabouttrvariabletrandtrfixedtrcosttrbehaviortra
Atrproducttrcosttristranytrcosttrinvolvedtrintrp retrvalid.
urchasingtrortrmanufacturingtrgoods.trIntrthetrcasetr
oftrmanufacturedtrgoods,trthesetrcoststrconsisttroftr 1-7 Antractivitytrbasetristratrmeasuretroftrwh
directtrmaterials,trdirecttrlabor,trandtrmanufacturingt atevertrcausestrthetrincurrencetroftratrvariabletrco
roverhead.trAtrperiodtrcosttristratrcosttrthattristrtakentr st.trExamplestroftractivitytrbasestrincludetrunitstrp
directlytrtotrthetrincometrstatementtrastrantrexpense roduced,trunitstrsold,trletterstrtyped,trbedstrintratr
trintrthetrperiodtrintrwhichtrittristrincurred. hospital,trmealstrservedtrintratrcafe,trservicetrcalls
trmade,tretc.
1-8 Thetrlineartrassumptiontristrreasonablytrvali
, dtrprovidingtrthattrthetrcosttrformulatristrusedtronlytr
withintrthetrrelevanttrrange.
tr tr tr tr tr tr tr
y Ray Garrison, Eric Noreen and Peter Brewer Verified Ch
tr tr tr tr tr tr tr tr tr
apter's 1 – 16 Complete
tr tr tr tr
,Table of Contents
tr tr
ChaptertrOne:trManagerialtrAccountingtrandtrCosttrConcepts
ChaptertrTwo:trJob-OrdertrCosting:trCalculatingtrUnittrProducttrCosts
ChaptertrThree:trJob-OrdertrCosting:trCosttrFlowstrandtrExternaltrReporting
ChaptertrFour:trProcesstrCosting
ChaptertrFive:trCost-Volume-ProfittrRelationships
ChaptertrSix:trVariabletrCostingtrandtrSegmenttrReporting:trToolstrfortrManagement
ChaptertrSeven:trActivity-BasedtrCosting:trAtrTooltrtotrAidtrDecisiontrMaking
ChaptertrEight:trMastertrBudgeting
ChaptertrNine:trFlexibletrBudgetstrandtrPerformancetrAnalysis
ChaptertrTen:trStandardtrCoststrandtrVariances
ChaptertrEleven:trResponsibilitytrAccountingtrSystems
ChaptertrTwelve:trStrategictrPerformancetrMeasurement
ChaptertrThirteen:trDifferentialtrAnalysis:trThetrKeytrtotrDecisiontrMaking
ChaptertrFourteen:trCapitaltrBudgetingtrDecisions
ChaptertrFifteen:trStatementtroftrCashtrFlows
ChaptertrSixteen:trFinancialtrStatementtrAnalysis
,Chapter 1 tr
Managerial Accounting and Cost Concepts
tr tr tr tr
Questions
1-1 Thetrthreetrmajortrtypestroftrproducttrcostst 1-4
rintratrmanufacturingtrcompanytraretrdirecttrmateri a. Variabletrcost:trThetrvariabletrcosttrpertrunittrist
als,trdirecttrlabor,trandtrmanufacturingtroverhead. rconstant,trbuttrtotaltrvariabletrcosttrchangestrin
trdirecttrproportiontrtotrchangestrintrvolume.
1-2 b. Fixedtrcost:trThetrtotaltrfixedtrcosttristrconstanttr
a. Directtrmaterialstraretrantrintegraltrparttroftra withintrthetrrelevanttrrange.trThetraveragetrfixedtr
trfinishedtrproducttrandtrtheirtrcoststrcantrbetrconve costtrpertrunittrvariestrinverselytrwithtrchangest
nientlytrtracedtrtotrit. r intrvolume.
b. Indirecttrmaterialstraretrgenerallytrsmalltrite c. Mixedtrcost:trAtrmixedtrcosttrcontainstrbotht
mstroftrmaterialtrsuchtrastrgluetrandtrnails.trTheytrma rvariabletrandtrfixedtrcosttrelements.
ytrbetrantrintegraltrparttroftratrfinishedtrproducttrbuttrth
eirtrcoststrcantrbetrtracedtrtotrthetrproducttronlytrattrgr 1-5
eattrcosttrortrinconvenience. a. Unittrfixedtrcoststrdecreasetrastrthetractivitytrlevelt
c. Directtrlabortrconsiststroftrlabortrcoststrthatt rincreases.
rcantrbetreasilytrtracedtrtotrparticulartrproducts. b. Unittrvariabletrcoststrremaintrconstanttrastrthet
Directtrlabortristralsotrcalledtr―touchtrlabor.‖ ractivitytrleveltrincreases.
d. Indirecttrlabortrconsiststroftrthetrlabortrcosts c. Totaltrfixedtrcoststrremaintrconstanttrastrthet
troftrjanitors,trsupervisors,trmaterialstrhandlers,tran ractivitytrleveltrincreases.
dtrothertrfactorytrworkerstrthattrcannottrbetrconven d. Totaltrvariabletrcoststrincreasetrastrthetractivityt
ientlytrtracedtrtotrparticulartrproducts.trThesetrlabo rleveltrincreases.
rtrcoststraretrincurredtrtotrsupporttrproduction,trbutt
rthetrworkerstrinvolvedtrdotrnottrdirectlytrworktrontrt 1-6
hetrproduct. a. Costtrbehavior:trCosttrbehaviortrreferstrtotrthetr
e. Manufacturingtroverheadtrincludestralltrman waytrintrwhichtrcoststrchangetrintrresponsetrtotr
ufacturingtrcoststrexcepttrdirecttrmaterialstrandtrdir changestrintratrmeasuretroftractivitytrsuchtrastrs
ecttrlabor.trConsequently,trmanufacturingtroverhe alestrvolume,trproductiontrvolume,trortrorderstr
adtrincludestrindirecttrmaterialstrandtrindirecttrlabortr processed.
astrwelltrastrothertrmanufacturingtrcosts. b. Relevanttrrange:trThetrrelevanttrrangetristrthe
trrangetroftractivitytrwithintrwhichtrassumption
1-3 strabouttrvariabletrandtrfixedtrcosttrbehaviortra
Atrproducttrcosttristranytrcosttrinvolvedtrintrp retrvalid.
urchasingtrortrmanufacturingtrgoods.trIntrthetrcasetr
oftrmanufacturedtrgoods,trthesetrcoststrconsisttroftr 1-7 Antractivitytrbasetristratrmeasuretroftrwh
directtrmaterials,trdirecttrlabor,trandtrmanufacturingt atevertrcausestrthetrincurrencetroftratrvariabletrco
roverhead.trAtrperiodtrcosttristratrcosttrthattristrtakentr st.trExamplestroftractivitytrbasestrincludetrunitstrp
directlytrtotrthetrincometrstatementtrastrantrexpense roduced,trunitstrsold,trletterstrtyped,trbedstrintratr
trintrthetrperiodtrintrwhichtrittristrincurred. hospital,trmealstrservedtrintratrcafe,trservicetrcalls
trmade,tretc.
1-8 Thetrlineartrassumptiontristrreasonablytrvali
, dtrprovidingtrthattrthetrcosttrformulatristrusedtronlytr
withintrthetrrelevanttrrange.
