Solution Manual for Managerial Accounting, 18th Edition By Ray Gar
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rison, Eric Noreen and Peter Brewer Verified Chapter's 1 –
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16 Complete
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,Table of Contents
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ChaptergfOne:gfManagerialgfAccountinggfandgfCostgfConcepts
ChaptergfTwo:gfJob-OrdergfCosting:gfCalculatinggfUnitgfProductgfCosts
ChaptergfThree:gfJob-OrdergfCosting:gfCostgfFlowsgfandgfExternalgfReporting
ChaptergfFour:gfProcessgfCosting
ChaptergfFive:gfCost-Volume-ProfitgfRelationships
ChaptergfSix:gfVariablegfCostinggfandgfSegmentgfReporting:gfToolsgfforgfManagement
ChaptergfSeven:gfActivity-BasedgfCosting:gfAgfToolgftogfAidgfDecisiongfMaking
ChaptergfEight:gfMastergfBudgeting
ChaptergfNine:gfFlexiblegfBudgetsgfandgfPerformancegfAnalysis
ChaptergfTen:gfStandardgfCostsgfandgfVariances
ChaptergfEleven:gfResponsibilitygfAccountinggfSystems
ChaptergfTwelve:gfStrategicgfPerformancegfMeasurement
ChaptergfThirteen:gfDifferentialgfAnalysis:gfThegfKeygftogfDecisiongfMaking
ChaptergfFourteen:gfCapitalgfBudgetinggfDecisions
ChaptergfFifteen:gfStatementgfofgfCashgfFlows
ChaptergfSixteen:gfFinancialgfStatementgfAnalysis
,Chapter 1 gf
Managerial Accounting and Cost Concepts
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Questions
1-1 Thegfthreegfmajorgftypesgfofgfproductgfcost 1-4
sgfingfagfmanufacturinggfcompanygfaregfdirectgfmat a. Variablegfcost:gfThegfvariablegfcostgfpergfunitgfi
erials,gfdirectgflabor,gfandgfmanufacturinggfoverhe sgfconstant,gfbutgftotalgfvariablegfcostgfchange
ad. sgfingfdirectgfproportiongftogfchangesgfingfvolu
me.
1-2 b. Fixedgfcost:gfThegftotalgffixedgfcostgfisgfconstant
a. Directgfmaterialsgfaregfangfintegralgfpartgfofgf gfwithingfthegfrelevantgfrange.gfThegfaveragegffixe
agffinishedgfproductgfandgftheirgfcostsgfcangfbegfco dgfcostgfpergfunitgfvariesgfinverselygfwithgfchang
nvenientlygftracedgftogfit. esg f ingfvolume.
b. Indirectgfmaterialsgfaregfgenerallygfsmallgfite c. Mixedgfcost:gfAgfmixedgfcostgfcontainsgfbot
msgfofgfmaterialgfsuchgfasgfgluegfandgfnails.gfTheygfm hgfvariablegfandgffixedgfcostgfelements.
aygfbegfangfintegralgfpartgfofgfagffinishedgfproductgfbut
gftheirgfcostsgfcangfbegftracedgftogfthegfproductgfonlygf 1-5
atgfgreatgfcostgforgfinconvenience. a. Unitgffixedgfcostsgfdecreasegfasgfthegfactivitygflev
c. Directgflaborgfconsistsgfofgflaborgfcostsgftha elgfincreases.
tgfcangfbegfeasilygftracedgftogfparticulargfproducts b. Unitgfvariablegfcostsgfremaingfconstantgfasgfth
. egfactivitygflevelgfincreases.
Directgflaborgfisgfalsogfcalledgf―touchgflabor.‖ c. Totalgffixedgfcostsgfremaingfconstantgfasgfth
d. Indirectgflaborgfconsistsgfofgfthegflaborgfcost egfactivitygflevelgfincreases.
sgfofgfjanitors,gfsupervisors,gfmaterialsgfhandlers,gfa d. Totalgfvariablegfcostsgfincreasegfasgfthegfactivit
ndgfothergffactorygfworkersgfthatgfcannotgfbegfconv ygflevelgfincreases.
enientlygftracedgftogfparticulargfproducts.gfThesegfl
aborgfcostsgfaregfincurredgftogfsupportgfproduction 1-6
,gfbutgfthegfworkersgfinvolvedgfdogfnotgfdirectlygfwo a. Costgfbehavior:gfCostgfbehaviorgfrefersgftogfth
rkgfongfthegfproduct. egfwaygfingfwhichgfcostsgfchangegfingfresponse
e. Manufacturinggfoverheadgfincludesgfallgfma gftogfchangesgfingfagfmeasuregfofgfactivitygfsuc
nufacturinggfcostsgfexceptgfdirectgfmaterialsgfandgfd hgfasgfsalesgfvolume,gfproductiongfvolume,gforgf
irectgflabor.gfConsequently,gfmanufacturinggfoverh ordersgfprocessed.
eadgfincludesgfindirectgfmaterialsgfandgfindirectgflabo b. Relevantgfrange:gfThegfrelevantgfrangegfisgfth
rgfasgfwellgfasgfothergfmanufacturinggfcosts. egfrangegfofgfactivitygfwithingfwhichgfassumpti
onsgfaboutgfvariablegfandgffixedgfcostgfbehavi
1-3 orgfaregfvalid.
Agfproductgfcostgfisgfanygfcostgfinvolvedgfingf
purchasinggforgfmanufacturinggfgoods.gfIngfthegfcas 1-7 Angfactivitygfbasegfisgfagfmeasuregfofgfw
egfofgfmanufacturedgfgoods,gfthesegfcostsgfconsistgf hatevergfcausesgfthegfincurrencegfofgfagfvariableg
ofgfdirectgfmaterials,gfdirectgflabor,gfandgfmanufactu fcost.gfExamplesgfofgfactivitygfbasesgfincludegfunit
ringgfoverhead.gfAgfperiodgfcostgfisgfagfcostgfthatgfisgf sgfproduced,gfunitsgfsold,gflettersgftyped,gfbedsgfi
takengfdirectlygftogfthegfincomegfstatementgfasgfangf ngfagfhospital,gfmealsgfservedgfingfagfcafe,gfservic
expensegfingfthegfperiodgfingfwhichgfitgfisgfincurred. egfcallsgfmade,gfetc.
, 1-8 Thegflineargfassumptiongfisgfreasonablygf
validgfprovidinggfthatgfthegfcostgfformulagfisgfusedgfo
nlygfwithingfthegfrelevantgfrange.
gf gf gf gf gf gf gf gf gf
rison, Eric Noreen and Peter Brewer Verified Chapter's 1 –
gf gf gf gf gf gf gf gf gf
16 Complete
gf gf
,Table of Contents
gf gf
ChaptergfOne:gfManagerialgfAccountinggfandgfCostgfConcepts
ChaptergfTwo:gfJob-OrdergfCosting:gfCalculatinggfUnitgfProductgfCosts
ChaptergfThree:gfJob-OrdergfCosting:gfCostgfFlowsgfandgfExternalgfReporting
ChaptergfFour:gfProcessgfCosting
ChaptergfFive:gfCost-Volume-ProfitgfRelationships
ChaptergfSix:gfVariablegfCostinggfandgfSegmentgfReporting:gfToolsgfforgfManagement
ChaptergfSeven:gfActivity-BasedgfCosting:gfAgfToolgftogfAidgfDecisiongfMaking
ChaptergfEight:gfMastergfBudgeting
ChaptergfNine:gfFlexiblegfBudgetsgfandgfPerformancegfAnalysis
ChaptergfTen:gfStandardgfCostsgfandgfVariances
ChaptergfEleven:gfResponsibilitygfAccountinggfSystems
ChaptergfTwelve:gfStrategicgfPerformancegfMeasurement
ChaptergfThirteen:gfDifferentialgfAnalysis:gfThegfKeygftogfDecisiongfMaking
ChaptergfFourteen:gfCapitalgfBudgetinggfDecisions
ChaptergfFifteen:gfStatementgfofgfCashgfFlows
ChaptergfSixteen:gfFinancialgfStatementgfAnalysis
,Chapter 1 gf
Managerial Accounting and Cost Concepts
gf gf gf gf
Questions
1-1 Thegfthreegfmajorgftypesgfofgfproductgfcost 1-4
sgfingfagfmanufacturinggfcompanygfaregfdirectgfmat a. Variablegfcost:gfThegfvariablegfcostgfpergfunitgfi
erials,gfdirectgflabor,gfandgfmanufacturinggfoverhe sgfconstant,gfbutgftotalgfvariablegfcostgfchange
ad. sgfingfdirectgfproportiongftogfchangesgfingfvolu
me.
1-2 b. Fixedgfcost:gfThegftotalgffixedgfcostgfisgfconstant
a. Directgfmaterialsgfaregfangfintegralgfpartgfofgf gfwithingfthegfrelevantgfrange.gfThegfaveragegffixe
agffinishedgfproductgfandgftheirgfcostsgfcangfbegfco dgfcostgfpergfunitgfvariesgfinverselygfwithgfchang
nvenientlygftracedgftogfit. esg f ingfvolume.
b. Indirectgfmaterialsgfaregfgenerallygfsmallgfite c. Mixedgfcost:gfAgfmixedgfcostgfcontainsgfbot
msgfofgfmaterialgfsuchgfasgfgluegfandgfnails.gfTheygfm hgfvariablegfandgffixedgfcostgfelements.
aygfbegfangfintegralgfpartgfofgfagffinishedgfproductgfbut
gftheirgfcostsgfcangfbegftracedgftogfthegfproductgfonlygf 1-5
atgfgreatgfcostgforgfinconvenience. a. Unitgffixedgfcostsgfdecreasegfasgfthegfactivitygflev
c. Directgflaborgfconsistsgfofgflaborgfcostsgftha elgfincreases.
tgfcangfbegfeasilygftracedgftogfparticulargfproducts b. Unitgfvariablegfcostsgfremaingfconstantgfasgfth
. egfactivitygflevelgfincreases.
Directgflaborgfisgfalsogfcalledgf―touchgflabor.‖ c. Totalgffixedgfcostsgfremaingfconstantgfasgfth
d. Indirectgflaborgfconsistsgfofgfthegflaborgfcost egfactivitygflevelgfincreases.
sgfofgfjanitors,gfsupervisors,gfmaterialsgfhandlers,gfa d. Totalgfvariablegfcostsgfincreasegfasgfthegfactivit
ndgfothergffactorygfworkersgfthatgfcannotgfbegfconv ygflevelgfincreases.
enientlygftracedgftogfparticulargfproducts.gfThesegfl
aborgfcostsgfaregfincurredgftogfsupportgfproduction 1-6
,gfbutgfthegfworkersgfinvolvedgfdogfnotgfdirectlygfwo a. Costgfbehavior:gfCostgfbehaviorgfrefersgftogfth
rkgfongfthegfproduct. egfwaygfingfwhichgfcostsgfchangegfingfresponse
e. Manufacturinggfoverheadgfincludesgfallgfma gftogfchangesgfingfagfmeasuregfofgfactivitygfsuc
nufacturinggfcostsgfexceptgfdirectgfmaterialsgfandgfd hgfasgfsalesgfvolume,gfproductiongfvolume,gforgf
irectgflabor.gfConsequently,gfmanufacturinggfoverh ordersgfprocessed.
eadgfincludesgfindirectgfmaterialsgfandgfindirectgflabo b. Relevantgfrange:gfThegfrelevantgfrangegfisgfth
rgfasgfwellgfasgfothergfmanufacturinggfcosts. egfrangegfofgfactivitygfwithingfwhichgfassumpti
onsgfaboutgfvariablegfandgffixedgfcostgfbehavi
1-3 orgfaregfvalid.
Agfproductgfcostgfisgfanygfcostgfinvolvedgfingf
purchasinggforgfmanufacturinggfgoods.gfIngfthegfcas 1-7 Angfactivitygfbasegfisgfagfmeasuregfofgfw
egfofgfmanufacturedgfgoods,gfthesegfcostsgfconsistgf hatevergfcausesgfthegfincurrencegfofgfagfvariableg
ofgfdirectgfmaterials,gfdirectgflabor,gfandgfmanufactu fcost.gfExamplesgfofgfactivitygfbasesgfincludegfunit
ringgfoverhead.gfAgfperiodgfcostgfisgfagfcostgfthatgfisgf sgfproduced,gfunitsgfsold,gflettersgftyped,gfbedsgfi
takengfdirectlygftogfthegfincomegfstatementgfasgfangf ngfagfhospital,gfmealsgfservedgfingfagfcafe,gfservic
expensegfingfthegfperiodgfingfwhichgfitgfisgfincurred. egfcallsgfmade,gfetc.
, 1-8 Thegflineargfassumptiongfisgfreasonablygf
validgfprovidinggfthatgfthegfcostgfformulagfisgfusedgfo
nlygfwithingfthegfrelevantgfrange.
