SOLUTION MANUAL FOR MANAGERIAL
ACCOUNTING, 18TH EDITION BY RAY
GARRISON, ERIC NOREEN AND PETER
BREWER VERIFIED CHAPTER'S ALL 1 - 16
COVERED GRADED A+ LATEST UPDATE.
,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 a 1-4
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 within
a. Direct materials are an integral part of a the relevant range. The average fixed cost per unit
finished product and their costs can be conveniently 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 be traced 1-5
to the product only at great cost or inconvenience. a. Unit fixed costs decrease as the activity level
c. Direct labor consists of labor costs that can increases.
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 to d. Total variable costs increase as the activity level
particular products. These labor costs are incurred to increases.
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 direct in which costs change in response to changes in
labor. Consequently, manufacturing overhead includes a measure of activity such as sales volume,
indirect materials and indirect labor as well as other production volume, or orders processed.
manufacturing costs. b. Relevant range: The relevant range is the range
of activity within which assumptions about
1-3 A product cost is any cost involved in variable and fixed cost behavior are 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
causes the incurrence of a variable cost. Examples
period cost is a cost that is taken directly to the
income statement as an expense in the period in which of activity bases include units produced, units sold,
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.
ACCOUNTING, 18TH EDITION BY RAY
GARRISON, ERIC NOREEN AND PETER
BREWER VERIFIED CHAPTER'S ALL 1 - 16
COVERED GRADED A+ LATEST UPDATE.
,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 a 1-4
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 within
a. Direct materials are an integral part of a the relevant range. The average fixed cost per unit
finished product and their costs can be conveniently 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 be traced 1-5
to the product only at great cost or inconvenience. a. Unit fixed costs decrease as the activity level
c. Direct labor consists of labor costs that can increases.
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 to d. Total variable costs increase as the activity level
particular products. These labor costs are incurred to increases.
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 direct in which costs change in response to changes in
labor. Consequently, manufacturing overhead includes a measure of activity such as sales volume,
indirect materials and indirect labor as well as other production volume, or orders processed.
manufacturing costs. b. Relevant range: The relevant range is the range
of activity within which assumptions about
1-3 A product cost is any cost involved in variable and fixed cost behavior are 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
causes the incurrence of a variable cost. Examples
period cost is a cost that is taken directly to the
income statement as an expense in the period in which of activity bases include units produced, units sold,
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.
