Solution Manual for Managerial Accounting, 18th Edition by Ray Garrison, Eric Noreen, and Peter Brewer | Verified Step-by-Step Answers | Revised Edition

Solution Manual for Managerial Accounting,
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18th Edition 9y




By Ray Garrison, Eric Noreen and Peter Brewer
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Verified Chapter's 1 - 16 | Complete
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,Table of Contents 9y 9y




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 9y




ManagerialAccounting and Cost Concepts y
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Questions


1-1 Thethreemajortypes ofproductcosts in a 9y 9y 9y 9y y
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manufacturing company are direct materials,
9y 9y 9y 9y 9y a. Variable cost: The variable cost per unit is 9y 9y 9y 9y 9y 9y 9y




direct labor, and manufacturing overhead.
9y 9y 9y 9y 9y constant,buttotal variable costchangesin
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direct proportion to changes in volume.
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1-2 b. Fixed cost: The total fixed cost is constant
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a. Direct materials are an integral part ofa 9y 9y 9y 9y 9y 9y 9y withintherelevantrange.Theaveragefixed
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9 y
9 y
9 y
9 y
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finished product and their costs can be
9y 9y 9y 9y 9y 9y 9y cost per unit varies inversely with changes in
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conveniently traced to it.
9y 9y 9y 9y volume.
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b. Indirect materials are generally small items 9y 9y 9y 9y 9y c. Mixed cost:Amixed costcontainsboth 9y 9y 9y 9y 9y 9y




of material such as glue and nails. They may be an
9y 9y 9y 9y 9y 9y 9y 9y 9y 9y 9y variable and fixed cost elements.
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integral part of a finishedproduct but their costs can
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be traced to the product only at great cost or
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inconvenience.
9y a. Unit fixedcostsdecrease as the activitylevel
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c. Direct labor consists of laborcosts that 9y 9y 9y 9y 9y 9y increases.
9y




can be easily traced to particular products.
9y 9y 9y 9y 9y 9y 9y b. Unitvariable costsremainconstant as the
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Direct labor is also called ―touch labor.‖
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activity level increases.
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d. Indirect labor consists of the labor costs of 9y 9y 9y 9y 9y 9y 9y c. Totalfixed costsremainconstant as the
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janitors,supervisors,materialshandlers,and
y
9 9y 9y 9y 9y activity level increases.
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other factory workers that cannot be
9y 9y 9y 9y 9y 9y d. Totalvariablecosts increase as the activity
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conveniently traced to particular products. These
9y 9y 9y 9y 9y 9y level increases.
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labor costs are incurred to support production,
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but the workers involved do not directly work on
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1-6
the product.
9y 9y a. Cost behavior: Cost behavior refers to the
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e. Manufacturing overhead includes all 9y 9y 9y way in which costs change in response to
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manufacturing costs except direct materials and
9y 9y 9y 9y 9y 9y changes in a measure of activity such as sales
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direct labor. Consequently, manufacturing
9y 9y 9y 9y volume,productionvolume,ororders
y
9 y
9 9y y
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overheadincludes indirectmaterialsandindirect
9y y
9 9y 9y y
9 y
9 processed.
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labor as well as other manufacturing costs.
9y 9y 9y 9y 9y 9y 9y b. Relevant range: The relevant range is the 9y 9y 9y 9y 9y 9y




rangeofactivitywithinwhichassumptions
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1-3 A product cost is any cost involved in 9y 9y 9y 9y 9y 9y 9y about variable and fixed cost behavior are
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purchasing or manufacturing goods. In the case of
9y 9y 9y 9y 9y 9y 9y 9y valid.
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manufactured goods, these costs consist of direct
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materials,directlabor,andmanufacturing
9y y
9 9y y
9 y
9 1-7 An activity base is a measure of 9y 9y 9y 9y 9y 9y




overhead. A period cost is a cost that is taken
9y 9y 9y 9y 9y 9y 9y 9y 9y 9y whatever causes the incurrence of a variable
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directly to the income statement as an expense in
9y 9y 9y 9y 9y 9y 9y 9y 9y cost.Examplesofactivitybases include units
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the period in which it is incurred.
9y 9y 9y 9y 9y 9y 9y produced, units sold, letters typed, beds in a
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hospital, meals served in a cafe, service calls
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made, etc.
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1-8 The linear assumption is reasonably valid 9y 9y 9y 9y 9y

, providing thatthecostformula is usedonly within
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the relevant range.
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