Solution Manual for Managerial Accounting,
11 11 11 11
18th Edition 11
By Ray Garrison, Eric Noreen and Peter Brewer
11 11 11 11 11 11 11
Verified Chapter's 1 - 16 | Complete
11 11 11 11 11 11
,Table of Contents11 11
Chapter One: Managerial Accounting and Cost Concepts
11 11 11 11 11 11
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
11 11 11 11 11 11 11
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
11 11 11 11 11 11 11 11
Chapter Four: Process Costing
11 11 11
Chapter Five: Cost-Volume-Profit Relationships
11 11 11
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
11 11 11 11 11 11 11 11 11
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
11 11 11 11 11 11 11 11 11
Chapter Eight: Master Budgeting
11 11 11
Chapter Nine: Flexible Budgets and Performance Analysis
11 11 11 11 11 11
Chapter Ten: Standard Costs and Variances
11 11 11 11 11
Chapter Eleven: Responsibility Accounting Systems
11 11 11 11
Chapter Twelve: Strategic Performance Measurement
11 11 11 11
Chapter Thirteen: Differential Analysis: The Key to Decision Making
11 11 11 11 11 11 11 11
Chapter Fourteen: Capital Budgeting Decisions
11 11 11 11
Chapter Fifteen: Statement of Cash Flows
11 11 11 11 11
Chapter Sixteen: Financial Statement Analysis
11 11 11 11
,Chapter 1 11
Managerial Accounting and Cost Concepts 11 11 11 11
Questions
1-1 The three major types of product costs 11 11 11 11 11 11 1-4
in a manufacturing company are direct
11 11 11 11 11 11 a. Variable cost: The variable cost per unit is 11 11 11 11 11 11 11
materials, direct labor, and manufacturing
11 11 11 11 11 constant, but total variable cost changes in
11 11 11 11 11 11 11
overhead.
11 direct proportion to changes in volume.
11 11 11 11 11 11
b. Fixed cost: The total fixed cost is constant
11 11 11 11 11 11 11
1-2 within the relevant range. The average fixed
11 11 11 11 11 11 1
a. Direct materials are an integral part of a 11 11 11 11 11 11 11 cost per unit varies inversely with changes
11 11 11 11 11 11 11
finished product and their costs can be
11 11 11 11 11 11 11 in volume.
1 1 11
conveniently traced to it.
11 11 11 11 c. Mixed cost: A mixed cost contains both 11 11 11 11 11 11
b. Indirect materials are generally small 11 11 11 11 variable and fixed cost elements.
11 11 11 11 11
items of material such as glue and nails. They
11 11 11 11 11 11 11 11 11
may be an integral part of a finished product but
11 11 11 11 11 11 11 11 11 11 1-5
their costs can be traced to the product only at
11 11 11 11 11 11 11 11 11 11 a. Unit fixed costs decrease as the activity level
11 11 11 11 11 11 11
great cost or inconvenience.
11 11 11 11 increases.
11
c. Direct labor consists of labor costs that 11 11 11 11 11 11 b. Unit variable costs remain constant as the
11 11 11 11 11 11
can be easily traced to particular products.
11 11 11 11 11 11 11 activity level increases.
11 11 11
Direct labor is also called ―touch labor.‖
11 11 11 11 11 11 c. Total fixed costs remain constant as the
11 11 11 11 11 11
d. Indirect labor consists of the labor costs 11 11 11 11 11 11 activity level increases.
11 11 11
of janitors, supervisors, materials handlers, and
11 11 11 11 11 11 d. Total variable costs increase as the activity
11 11 11 11 11 11
other factory workers that cannot be
11 11 11 11 11 11 level increases.
11 11
conveniently traced to particular products.
11 11 11 11 11
These labor costs are incurred to support
11 11 11 11 11 11 11 1-6
production, but the workers involved do not
11 11 11 11 11 11 11 a. Cost behavior: Cost behavior refers to the
11 11 11 11 11 11
directly work on the product.
11 11 11 11 11 way in which costs change in response to
11 11 11 11 11 11 11 11
e. Manufacturing overhead includes all 11 11 11 changes in a measure of activity such as
11 11 11 11 11 11 11 11
manufacturing costs except direct materials and
11 11 11 11 11 11 sales volume, production volume, or orders
11 11 11 11 11 11
direct labor. Consequently, manufacturing
11 11 11 11 processed.
11
overhead includes indirect materials and indirect
11 11 11 11 11 11 b. Relevant range: The relevant range is the 11 11 11 11 11 11
labor as well as other manufacturing costs.
11 11 11 11 11 11 11 range of activity within which assumptions
11 11 11 11 11 11
about variable and fixed cost behavior are
11 11 11 11 11 11 11
1-3 A product cost is any cost involved in11 11 11 11 11 11 11 valid.
11
purchasing or manufacturing goods. In the case
11 11 11 11 11 11 11
of manufactured goods, these costs consist of
11 11 11 11 11 11 11 1-7 An activity base is a measure of 11 11 11 11 11 11
direct materials, direct labor, and manufacturing
11 11 11 11 11 11 whatever causes the incurrence of a variable
11 11 11 11 11 11 11
overhead. A period cost is a cost that is taken
11 11 11 11 11 11 11 11 11 11 cost. Examples of activity bases include units
11 11 11 11 11 11 11
directly to the income statement as an expense
11 11 11 11 11 11 11 11 produced, units sold, letters typed, beds in a
11 11 11 11 11 11 11 11
in the period in which it is incurred.
11 11 11 11 11 11 11 11 hospital, meals served in a cafe, service calls
11 11 11 11 11 11 11 11
made, etc.
11 11
1-8 The linear assumption is reasonably
11 11 11 11
, valid providing that the cost formula is used only
11 11 11 11 11 11 11 11 11
within the relevant range.
11 11 11 11
11 11 11 11
18th Edition 11
By Ray Garrison, Eric Noreen and Peter Brewer
11 11 11 11 11 11 11
Verified Chapter's 1 - 16 | Complete
11 11 11 11 11 11
,Table of Contents11 11
Chapter One: Managerial Accounting and Cost Concepts
11 11 11 11 11 11
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
11 11 11 11 11 11 11
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
11 11 11 11 11 11 11 11
Chapter Four: Process Costing
11 11 11
Chapter Five: Cost-Volume-Profit Relationships
11 11 11
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
11 11 11 11 11 11 11 11 11
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
11 11 11 11 11 11 11 11 11
Chapter Eight: Master Budgeting
11 11 11
Chapter Nine: Flexible Budgets and Performance Analysis
11 11 11 11 11 11
Chapter Ten: Standard Costs and Variances
11 11 11 11 11
Chapter Eleven: Responsibility Accounting Systems
11 11 11 11
Chapter Twelve: Strategic Performance Measurement
11 11 11 11
Chapter Thirteen: Differential Analysis: The Key to Decision Making
11 11 11 11 11 11 11 11
Chapter Fourteen: Capital Budgeting Decisions
11 11 11 11
Chapter Fifteen: Statement of Cash Flows
11 11 11 11 11
Chapter Sixteen: Financial Statement Analysis
11 11 11 11
,Chapter 1 11
Managerial Accounting and Cost Concepts 11 11 11 11
Questions
1-1 The three major types of product costs 11 11 11 11 11 11 1-4
in a manufacturing company are direct
11 11 11 11 11 11 a. Variable cost: The variable cost per unit is 11 11 11 11 11 11 11
materials, direct labor, and manufacturing
11 11 11 11 11 constant, but total variable cost changes in
11 11 11 11 11 11 11
overhead.
11 direct proportion to changes in volume.
11 11 11 11 11 11
b. Fixed cost: The total fixed cost is constant
11 11 11 11 11 11 11
1-2 within the relevant range. The average fixed
11 11 11 11 11 11 1
a. Direct materials are an integral part of a 11 11 11 11 11 11 11 cost per unit varies inversely with changes
11 11 11 11 11 11 11
finished product and their costs can be
11 11 11 11 11 11 11 in volume.
1 1 11
conveniently traced to it.
11 11 11 11 c. Mixed cost: A mixed cost contains both 11 11 11 11 11 11
b. Indirect materials are generally small 11 11 11 11 variable and fixed cost elements.
11 11 11 11 11
items of material such as glue and nails. They
11 11 11 11 11 11 11 11 11
may be an integral part of a finished product but
11 11 11 11 11 11 11 11 11 11 1-5
their costs can be traced to the product only at
11 11 11 11 11 11 11 11 11 11 a. Unit fixed costs decrease as the activity level
11 11 11 11 11 11 11
great cost or inconvenience.
11 11 11 11 increases.
11
c. Direct labor consists of labor costs that 11 11 11 11 11 11 b. Unit variable costs remain constant as the
11 11 11 11 11 11
can be easily traced to particular products.
11 11 11 11 11 11 11 activity level increases.
11 11 11
Direct labor is also called ―touch labor.‖
11 11 11 11 11 11 c. Total fixed costs remain constant as the
11 11 11 11 11 11
d. Indirect labor consists of the labor costs 11 11 11 11 11 11 activity level increases.
11 11 11
of janitors, supervisors, materials handlers, and
11 11 11 11 11 11 d. Total variable costs increase as the activity
11 11 11 11 11 11
other factory workers that cannot be
11 11 11 11 11 11 level increases.
11 11
conveniently traced to particular products.
11 11 11 11 11
These labor costs are incurred to support
11 11 11 11 11 11 11 1-6
production, but the workers involved do not
11 11 11 11 11 11 11 a. Cost behavior: Cost behavior refers to the
11 11 11 11 11 11
directly work on the product.
11 11 11 11 11 way in which costs change in response to
11 11 11 11 11 11 11 11
e. Manufacturing overhead includes all 11 11 11 changes in a measure of activity such as
11 11 11 11 11 11 11 11
manufacturing costs except direct materials and
11 11 11 11 11 11 sales volume, production volume, or orders
11 11 11 11 11 11
direct labor. Consequently, manufacturing
11 11 11 11 processed.
11
overhead includes indirect materials and indirect
11 11 11 11 11 11 b. Relevant range: The relevant range is the 11 11 11 11 11 11
labor as well as other manufacturing costs.
11 11 11 11 11 11 11 range of activity within which assumptions
11 11 11 11 11 11
about variable and fixed cost behavior are
11 11 11 11 11 11 11
1-3 A product cost is any cost involved in11 11 11 11 11 11 11 valid.
11
purchasing or manufacturing goods. In the case
11 11 11 11 11 11 11
of manufactured goods, these costs consist of
11 11 11 11 11 11 11 1-7 An activity base is a measure of 11 11 11 11 11 11
direct materials, direct labor, and manufacturing
11 11 11 11 11 11 whatever causes the incurrence of a variable
11 11 11 11 11 11 11
overhead. A period cost is a cost that is taken
11 11 11 11 11 11 11 11 11 11 cost. Examples of activity bases include units
11 11 11 11 11 11 11
directly to the income statement as an expense
11 11 11 11 11 11 11 11 produced, units sold, letters typed, beds in a
11 11 11 11 11 11 11 11
in the period in which it is incurred.
11 11 11 11 11 11 11 11 hospital, meals served in a cafe, service calls
11 11 11 11 11 11 11 11
made, etc.
11 11
1-8 The linear assumption is reasonably
11 11 11 11
, valid providing that the cost formula is used only
11 11 11 11 11 11 11 11 11
within the relevant range.
11 11 11 11
