Solution Manual for Managerial Accounting,
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18th Edition yb
By Ray Garrison, Eric Noreen and Peter Brewer
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Verified Chapter's 1 - 16 | Complete
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,Table of Contentsyb yb
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 yb
Managerial Accounting and Cost Concepts yb yb yb yb
Questions
1-1 The three major types of product costs yb yb yb yb yb yb 1-4
in a manufacturing company are direct
yb yb yb yb yb yb a. Variable cost: The variable cost per unit is yb yb yb yb yb yb yb
materials, direct labor, and manufacturing
yb yb yb yb yb constant, but total variable cost changes in
yb yb yb yb yb yb yb
overhead.
yb direct proportion to changes in volume.
yb yb yb yb yb yb
b. Fixed cost: The total fixed cost is constant
yb yb yb yb yb yb yb
1-2 within the relevant range. The average fixed
yb yb yb yb yb yb yb
a. Direct materials are an integral part of a yb yb yb yb yb yb yb cost per unit varies inversely with changes
yb yb yb yb yb yb yb
finished product and their costs can be
yb yb yb yb yb yb yb in volume.
y b yb
conveniently traced to it.
yb yb yb yb c. Mixed cost: A mixed cost contains both yb yb yb yb yb yb
b. Indirect materials are generally small yb yb yb yb variable and fixed cost elements.
yb yb yb yb yb
items of material such as glue and nails. They
yb yb yb yb yb yb yb yb yb
may be an integral part of a finished product but
yb yb yb yb yb yb yb yb yb yb 1-5
their costs can be traced to the product only at
yb yb yb yb yb yb yb yb yb yb a. Unit fixed costs decrease as the activity level
yb yb yb yb yb yb yb
great cost or inconvenience.
yb yb yb yb increases.
yb
c. Direct labor consists of labor costs that yb yb yb yb yb yb b. Unit variable costs remain constant as the
yb yb yb yb yb yb
can be easily traced to particular products.
yb yb yb yb yb yb yb activity level increases.
yb yb yb
Direct labor is also called ―touch labor.‖
yb yb yb yb yb yb c. Total fixed costs remain constant as the
yb yb yb yb yb yb
d. Indirect labor consists of the labor costs yb yb yb yb yb yb activity level increases.
yb yb yb
of janitors, supervisors, materials handlers, and
yb yb yb yb yb yb d. Total variable costs increase as the activity
yb yb yb yb yb yb
other factory workers that cannot be
yb yb yb yb yb yb level increases.
yb yb
conveniently traced to particular products.
yb yb yb yb yb
These labor costs are incurred to support
yb yb yb yb yb yb yb 1-6
production, but the workers involved do not
yb yb yb yb yb yb yb a. Cost behavior: Cost behavior refers to the
yb yb yb yb yb yb
directly work on the product.
yb yb yb yb yb way in which costs change in response to
yb yb yb yb yb yb yb yb
e. Manufacturing overhead includes all yb yb yb changes in a measure of activity such as
yb yb yb yb yb yb yb yb
manufacturing costs except direct materials and
yb yb yb yb yb yb sales volume, production volume, or orders
yb yb yb yb yb yb
direct labor. Consequently, manufacturing
yb yb yb yb processed.
yb
overhead includes indirect materials and indirect
yb yb yb yb yb yb b. Relevant range: The relevant range is the yb yb yb yb yb yb
labor as well as other manufacturing costs.
yb yb yb yb yb yb yb range of activity within which assumptions
yb yb yb yb yb yb
about variable and fixed cost behavior are
yb yb yb yb yb yb yb
1-3 A product cost is any cost involved in yb yb yb yb yb yb yb valid.
yb
purchasing or manufacturing goods. In the case
yb yb yb yb yb yb yb
of manufactured goods, these costs consist of
yb yb yb yb yb yb yb 1-7 An activity base is a measure of yb yb yb yb yb yb
direct materials, direct labor, and manufacturing
yb yb yb yb yb yb whatever causes the incurrence of a variable
yb yb yb yb yb yb yb
overhead. A period cost is a cost that is taken
yb yb yb yb yb yb yb yb yb yb cost. Examples of activity bases include units
yb yb yb yb yb yb yb
directly to the income statement as an expense
yb yb yb yb yb yb yb yb produced, units sold, letters typed, beds in a
yb yb yb yb yb yb yb yb
in the period in which it is incurred.
yb yb yb yb yb yb yb yb hospital, meals served in a cafe, service calls
yb yb yb yb yb yb yb yb
made, etc.
yb yb
1-8 The linear assumption is reasonably yb yb yb yb
, yb valid providing that the cost formula is used only
yb yb yb yb yb yb yb yb
yb within the relevant range.
yb yb yb
yb yb yb yb
18th Edition yb
By Ray Garrison, Eric Noreen and Peter Brewer
yb yb yb yb yb yb yb
Verified Chapter's 1 - 16 | Complete
yb yb yb yb yb yb
,Table of Contentsyb yb
Chapter One: Managerial Accounting and Cost Concepts
yb yb yb yb yb yb
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
yb yb yb yb yb yb yb
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
yb yb yb yb yb yb yb yb
Chapter Four: Process Costing
yb yb yb
Chapter Five: Cost-Volume-Profit Relationships
yb yb yb
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
yb yb yb yb yb yb yb yb yb
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
yb yb yb yb yb yb yb yb yb
Chapter Eight: Master Budgeting
yb yb yb
Chapter Nine: Flexible Budgets and Performance Analysis
yb yb yb yb yb yb
Chapter Ten: Standard Costs and Variances
yb yb yb yb yb
Chapter Eleven: Responsibility Accounting Systems
yb yb yb yb
Chapter Twelve: Strategic Performance Measurement
yb yb yb yb
Chapter Thirteen: Differential Analysis: The Key to Decision Making
yb yb yb yb yb yb yb yb
Chapter Fourteen: Capital Budgeting Decisions
yb yb yb yb
Chapter Fifteen: Statement of Cash Flows
yb yb yb yb yb
Chapter Sixteen: Financial Statement Analysis
yb yb yb yb
,Chapter 1 yb
Managerial Accounting and Cost Concepts yb yb yb yb
Questions
1-1 The three major types of product costs yb yb yb yb yb yb 1-4
in a manufacturing company are direct
yb yb yb yb yb yb a. Variable cost: The variable cost per unit is yb yb yb yb yb yb yb
materials, direct labor, and manufacturing
yb yb yb yb yb constant, but total variable cost changes in
yb yb yb yb yb yb yb
overhead.
yb direct proportion to changes in volume.
yb yb yb yb yb yb
b. Fixed cost: The total fixed cost is constant
yb yb yb yb yb yb yb
1-2 within the relevant range. The average fixed
yb yb yb yb yb yb yb
a. Direct materials are an integral part of a yb yb yb yb yb yb yb cost per unit varies inversely with changes
yb yb yb yb yb yb yb
finished product and their costs can be
yb yb yb yb yb yb yb in volume.
y b yb
conveniently traced to it.
yb yb yb yb c. Mixed cost: A mixed cost contains both yb yb yb yb yb yb
b. Indirect materials are generally small yb yb yb yb variable and fixed cost elements.
yb yb yb yb yb
items of material such as glue and nails. They
yb yb yb yb yb yb yb yb yb
may be an integral part of a finished product but
yb yb yb yb yb yb yb yb yb yb 1-5
their costs can be traced to the product only at
yb yb yb yb yb yb yb yb yb yb a. Unit fixed costs decrease as the activity level
yb yb yb yb yb yb yb
great cost or inconvenience.
yb yb yb yb increases.
yb
c. Direct labor consists of labor costs that yb yb yb yb yb yb b. Unit variable costs remain constant as the
yb yb yb yb yb yb
can be easily traced to particular products.
yb yb yb yb yb yb yb activity level increases.
yb yb yb
Direct labor is also called ―touch labor.‖
yb yb yb yb yb yb c. Total fixed costs remain constant as the
yb yb yb yb yb yb
d. Indirect labor consists of the labor costs yb yb yb yb yb yb activity level increases.
yb yb yb
of janitors, supervisors, materials handlers, and
yb yb yb yb yb yb d. Total variable costs increase as the activity
yb yb yb yb yb yb
other factory workers that cannot be
yb yb yb yb yb yb level increases.
yb yb
conveniently traced to particular products.
yb yb yb yb yb
These labor costs are incurred to support
yb yb yb yb yb yb yb 1-6
production, but the workers involved do not
yb yb yb yb yb yb yb a. Cost behavior: Cost behavior refers to the
yb yb yb yb yb yb
directly work on the product.
yb yb yb yb yb way in which costs change in response to
yb yb yb yb yb yb yb yb
e. Manufacturing overhead includes all yb yb yb changes in a measure of activity such as
yb yb yb yb yb yb yb yb
manufacturing costs except direct materials and
yb yb yb yb yb yb sales volume, production volume, or orders
yb yb yb yb yb yb
direct labor. Consequently, manufacturing
yb yb yb yb processed.
yb
overhead includes indirect materials and indirect
yb yb yb yb yb yb b. Relevant range: The relevant range is the yb yb yb yb yb yb
labor as well as other manufacturing costs.
yb yb yb yb yb yb yb range of activity within which assumptions
yb yb yb yb yb yb
about variable and fixed cost behavior are
yb yb yb yb yb yb yb
1-3 A product cost is any cost involved in yb yb yb yb yb yb yb valid.
yb
purchasing or manufacturing goods. In the case
yb yb yb yb yb yb yb
of manufactured goods, these costs consist of
yb yb yb yb yb yb yb 1-7 An activity base is a measure of yb yb yb yb yb yb
direct materials, direct labor, and manufacturing
yb yb yb yb yb yb whatever causes the incurrence of a variable
yb yb yb yb yb yb yb
overhead. A period cost is a cost that is taken
yb yb yb yb yb yb yb yb yb yb cost. Examples of activity bases include units
yb yb yb yb yb yb yb
directly to the income statement as an expense
yb yb yb yb yb yb yb yb produced, units sold, letters typed, beds in a
yb yb yb yb yb yb yb yb
in the period in which it is incurred.
yb yb yb yb yb yb yb yb hospital, meals served in a cafe, service calls
yb yb yb yb yb yb yb yb
made, etc.
yb yb
1-8 The linear assumption is reasonably yb yb yb yb
, yb valid providing that the cost formula is used only
yb yb yb yb yb yb yb yb
yb within the relevant range.
yb yb yb
