Solution Manual for Managerial
Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter
Brewer Verified Chapter's 1 - 16 |
Complete
,Table of Contents
8n 8n
Chapter8nOne:8nManagerial8nAccounting8nand8nCos
t8nConcepts8 n Chapter8nTwo:8nJob-
Order8nCosting:8nCalculating8nUnit8nProduct8nCost
s
Chapter8nThree:8nJob-
Order8nCosting:8nCost8nFlows8nand8nExternal8nReporting8 n Chapter
8nFour:8nProcess8nCosting
Chapter8nFive:8nCost-Volume-Profit8nRelationships
Chapter8nSix:8nVariable8nCosting8nand8nSegment8nReporting:8nToo
ls8nfor8nManagement8 n Chapter8nSeven:8nActivity-
Based8nCosting:8nA8nTool8nto8nAid8nDecision8nMaking8 n Chapter8nE
ight:8nMaster8nBudgeting
Chapter8nNine:8nFlexible8nBudgets8nand8nPerforma
nce8nAnalysis8 n Chapter8nTen:8nStandard8nCosts8na
nd8nVariances
Chapter8nEleven:8nResponsibility8nAccounting8nSys
tems8 n Chapter8nTwelve:8nStrategic8nPerformance
8nMeasurement
Chapter8nThirteen:8nDifferential8nAnalysis:8nThe8nKey8nto8nDeci
sion8nMaking8 n Chapter8nFourteen:8nCapital8nBudgeting8nDecisi
ons8nChapter8nFifteen:8nStatement8nof8nCash
Flows8nChapter8nSixteen:8nFinancial8nState
ment8nAnalysis
, Chapter 1 8n
Managerial Accounting and Cost Conce
8n 8n 8n 8n8n
pts
Questions
ured8ngoods,8nthese8ncosts8nconsist8nof8 n dir
1-1 The8nthree8nmajor8ntypes8nof8npr
ect8nmaterials,8ndirect8nlabor,8nand8nmanufa
oduct8ncosts8 n in8na8nmanufacturing8nco
cturing8 n overhead.8nA8nperiod8ncost8nis8na8n
mpany8nare8ndirect8nmaterials,8ndirect8
cost8nthat8nis8ntaken8 n directly8nto8 n the8 n i
nlabor,8nand8nmanufacturing8 n overhead
ncome8 n statement8 n as8 n an8 n expense8nin8n
.
the8nperiod8nin8nwhich8nit8nis8nincurred.
1-2
a. Direct8nmaterials8nare8nan8ninte
gral8npart8nof8na8 n finished8nproduct8
nand8ntheir8ncosts8ncan8nbe8 n convenie
ntly8ntraced8nto8nit.
b. Indirect8nmaterials8nare8ngenerally
8nsmall8 n items8nof8nmaterial 8nsuch8nas8ng
lue8nand8nnails.8nThey8 n may8nbe8nan8nint
egral8npart8nof8na8nfinished8nproduct8nbut
8ntheir8ncosts8ncan8nbe8ntraced8nto8nthe8n
product8nonly8nat8 n great8ncost8nor8nincon
venience.
c. Direct8nlabor8nconsists8nof8nl
abor8ncosts8nthat8 n can8nbe8neasil
y8ntraced8nto8nparticular8nproduct
s.
Direct8nlabor8nis8nalso8ncalled8n―touch8nla
bor.‖
d. Indirect8nlabor8nconsists 8nof8nthe8n
labor8ncosts8 n of8njanitors,8nsupervisors,
8nmaterials8nhandlers,8nand8 n other8nfac
tory8nworkers8nthat8ncannot8nbe8nconve
niently8ntraced8nto8nparticular8nproducts
.8nThese8nlabor8ncosts8 n are8nincurred8nt
o8nsupport8 n production,8nbut8nthe8nwor
kers8ninvolved8ndo8nnot8 n directly8nwork
8non8nthe8nproduct.
e. Manufacturing8 n overhead8 n include
s8nall8 n manufacturing8ncosts8nexcept8ndi
rect8nmaterials8nand8 n direct8nlabor.8nCo
nsequently,8nmanufacturing8noverhead8ni
ncludes8nindirect8nmaterials8nand8nindire
ct8 n labor8nas8nwell8nas8nother8nmanufact
uring8ncosts.
1-3
A8nproduct8ncost8nis8nany8ncost8ni
nvolved8nin8npurchasing8nor8nmanufacturi
ng8ngoods.8nIn8nthe8ncase8 n of8nmanufact
, 1-4
a. Variable8ncost:8nThe8nvariable8nc
ost8nper8nunit8nis8nconstant,8nbut
8ntotal8nvariable8ncost8nchanges8n
in8ndirect8nproportion8nto8nchang
es8nin8nvolume.
b. Fixed8ncost:8nThe8ntotal8nfixed8nco
st8nis8nconstant8 n within8nthe8nrele
vant8nrange.8nThe8naverage8nfixed
8 n cost8nper8nunit8nvaries8ninversel
y8nwith8nchanges8nin8nvolume.
c. Mixed8ncost:8nA8nmixed8ncost8
ncontains 8nboth8 n variable8nan
d8nfixed8ncost8nelements.
1-5
a. Unit8nfixed8ncosts8ndecrease
8nas8nthe8nactivity 8nlevel8nin
creases.
b. Unit8nvariable8ncosts8nremain8n
constant8nas8nthe8 n activity 8nle
vel8nincreases.
c. Total8nfixed8ncosts8nremain8n
constant8nas8nthe8 n activity 8n
level8nincreases.
d. Total8nvariable8ncosts8nincrease
8nas8nthe8nactivity 8nlevel8nincre
ases.
1-6
a. Cost8nbehavior:8nCost8nbehavior8n
refers8 n to8nthe8nway8nin8nwhich8
ncosts8nchange8nin8nresponse 8nto8
nchanges8nin8na8nmeasure8nof8nac
tivity8nsuch8nas8 n sales8nvolume,8
nproduction8nvolume,8nor8norders
8nprocessed.
b. Relevant8nrange:8nThe8nrelevant8
nrange8 n is8nthe8 n range8nof8nacti
vity8nwithin8nwhich8nassumptions
8 n about8nvariable8nand8 n fixed8n
cost8nbehavior8nare8 n valid.
1-7 An8 n activity8 n base8 n is8 n a
8 n measure8nof8 n whatever8ncauses8
nthe8nincurrence8nof8na8nvariable8
n cost.8nExamples8nof8nactivity 8nbas
es8ninclude8nunits8 n produced,8nuni
ts8nsold,8nletters8ntyped,8nbeds8nin
8na8 n hospital,8nmeals8nserved8nin8n
a8ncafe,8nservice8ncalls8nmade,8net
c.
1-8 The8n linear8n assumption 8n is8n reaso
nably
Accounting,
18th Edition
By Ray Garrison, Eric Noreen and Peter
Brewer Verified Chapter's 1 - 16 |
Complete
,Table of Contents
8n 8n
Chapter8nOne:8nManagerial8nAccounting8nand8nCos
t8nConcepts8 n Chapter8nTwo:8nJob-
Order8nCosting:8nCalculating8nUnit8nProduct8nCost
s
Chapter8nThree:8nJob-
Order8nCosting:8nCost8nFlows8nand8nExternal8nReporting8 n Chapter
8nFour:8nProcess8nCosting
Chapter8nFive:8nCost-Volume-Profit8nRelationships
Chapter8nSix:8nVariable8nCosting8nand8nSegment8nReporting:8nToo
ls8nfor8nManagement8 n Chapter8nSeven:8nActivity-
Based8nCosting:8nA8nTool8nto8nAid8nDecision8nMaking8 n Chapter8nE
ight:8nMaster8nBudgeting
Chapter8nNine:8nFlexible8nBudgets8nand8nPerforma
nce8nAnalysis8 n Chapter8nTen:8nStandard8nCosts8na
nd8nVariances
Chapter8nEleven:8nResponsibility8nAccounting8nSys
tems8 n Chapter8nTwelve:8nStrategic8nPerformance
8nMeasurement
Chapter8nThirteen:8nDifferential8nAnalysis:8nThe8nKey8nto8nDeci
sion8nMaking8 n Chapter8nFourteen:8nCapital8nBudgeting8nDecisi
ons8nChapter8nFifteen:8nStatement8nof8nCash
Flows8nChapter8nSixteen:8nFinancial8nState
ment8nAnalysis
, Chapter 1 8n
Managerial Accounting and Cost Conce
8n 8n 8n 8n8n
pts
Questions
ured8ngoods,8nthese8ncosts8nconsist8nof8 n dir
1-1 The8nthree8nmajor8ntypes8nof8npr
ect8nmaterials,8ndirect8nlabor,8nand8nmanufa
oduct8ncosts8 n in8na8nmanufacturing8nco
cturing8 n overhead.8nA8nperiod8ncost8nis8na8n
mpany8nare8ndirect8nmaterials,8ndirect8
cost8nthat8nis8ntaken8 n directly8nto8 n the8 n i
nlabor,8nand8nmanufacturing8 n overhead
ncome8 n statement8 n as8 n an8 n expense8nin8n
.
the8nperiod8nin8nwhich8nit8nis8nincurred.
1-2
a. Direct8nmaterials8nare8nan8ninte
gral8npart8nof8na8 n finished8nproduct8
nand8ntheir8ncosts8ncan8nbe8 n convenie
ntly8ntraced8nto8nit.
b. Indirect8nmaterials8nare8ngenerally
8nsmall8 n items8nof8nmaterial 8nsuch8nas8ng
lue8nand8nnails.8nThey8 n may8nbe8nan8nint
egral8npart8nof8na8nfinished8nproduct8nbut
8ntheir8ncosts8ncan8nbe8ntraced8nto8nthe8n
product8nonly8nat8 n great8ncost8nor8nincon
venience.
c. Direct8nlabor8nconsists8nof8nl
abor8ncosts8nthat8 n can8nbe8neasil
y8ntraced8nto8nparticular8nproduct
s.
Direct8nlabor8nis8nalso8ncalled8n―touch8nla
bor.‖
d. Indirect8nlabor8nconsists 8nof8nthe8n
labor8ncosts8 n of8njanitors,8nsupervisors,
8nmaterials8nhandlers,8nand8 n other8nfac
tory8nworkers8nthat8ncannot8nbe8nconve
niently8ntraced8nto8nparticular8nproducts
.8nThese8nlabor8ncosts8 n are8nincurred8nt
o8nsupport8 n production,8nbut8nthe8nwor
kers8ninvolved8ndo8nnot8 n directly8nwork
8non8nthe8nproduct.
e. Manufacturing8 n overhead8 n include
s8nall8 n manufacturing8ncosts8nexcept8ndi
rect8nmaterials8nand8 n direct8nlabor.8nCo
nsequently,8nmanufacturing8noverhead8ni
ncludes8nindirect8nmaterials8nand8nindire
ct8 n labor8nas8nwell8nas8nother8nmanufact
uring8ncosts.
1-3
A8nproduct8ncost8nis8nany8ncost8ni
nvolved8nin8npurchasing8nor8nmanufacturi
ng8ngoods.8nIn8nthe8ncase8 n of8nmanufact
, 1-4
a. Variable8ncost:8nThe8nvariable8nc
ost8nper8nunit8nis8nconstant,8nbut
8ntotal8nvariable8ncost8nchanges8n
in8ndirect8nproportion8nto8nchang
es8nin8nvolume.
b. Fixed8ncost:8nThe8ntotal8nfixed8nco
st8nis8nconstant8 n within8nthe8nrele
vant8nrange.8nThe8naverage8nfixed
8 n cost8nper8nunit8nvaries8ninversel
y8nwith8nchanges8nin8nvolume.
c. Mixed8ncost:8nA8nmixed8ncost8
ncontains 8nboth8 n variable8nan
d8nfixed8ncost8nelements.
1-5
a. Unit8nfixed8ncosts8ndecrease
8nas8nthe8nactivity 8nlevel8nin
creases.
b. Unit8nvariable8ncosts8nremain8n
constant8nas8nthe8 n activity 8nle
vel8nincreases.
c. Total8nfixed8ncosts8nremain8n
constant8nas8nthe8 n activity 8n
level8nincreases.
d. Total8nvariable8ncosts8nincrease
8nas8nthe8nactivity 8nlevel8nincre
ases.
1-6
a. Cost8nbehavior:8nCost8nbehavior8n
refers8 n to8nthe8nway8nin8nwhich8
ncosts8nchange8nin8nresponse 8nto8
nchanges8nin8na8nmeasure8nof8nac
tivity8nsuch8nas8 n sales8nvolume,8
nproduction8nvolume,8nor8norders
8nprocessed.
b. Relevant8nrange:8nThe8nrelevant8
nrange8 n is8nthe8 n range8nof8nacti
vity8nwithin8nwhich8nassumptions
8 n about8nvariable8nand8 n fixed8n
cost8nbehavior8nare8 n valid.
1-7 An8 n activity8 n base8 n is8 n a
8 n measure8nof8 n whatever8ncauses8
nthe8nincurrence8nof8na8nvariable8
n cost.8nExamples8nof8nactivity 8nbas
es8ninclude8nunits8 n produced,8nuni
ts8nsold,8nletters8ntyped,8nbeds8nin
8na8 n hospital,8nmeals8nserved8nin8n
a8ncafe,8nservice8ncalls8nmade,8net
c.
1-8 The8n linear8n assumption 8n is8n reaso
nably
