Solution Manual
Managerial Accounting,
By Ray Garrison, Eric Noreen And Peter Brewer,
18th Edition
,Table Of Contents
Chapter One: Managerial Accounting And Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows And External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing And Segment Reporting: Tools For Management
Chapter Seven: Activity-Based Costing: A Tool To Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets And Performance Analysis
Chapter Ten: Standard Costs And Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key To Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement Of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting And Cost Concepts
Questions
1-1 The Three Major Types Of Product 1-4
CostsIn A Manufacturing Company Are Direct a. Variable Cost: The Variable Cost Per Unit
Materials, Direct Labor, And Manufacturing Is Constant, But Total Variable Cost
Overhead. Changes InDirect Proportion To Changes
In Volume.
1-2 b. Fixed Cost: The Total Fixed Cost Is
a. Direct Materials Are An Integral Part Of Constant Within The Relevant Range. The
AFinished Product And Their Costs Can Be Average FixedCost Per Unit Varies Inversely
Conveniently Traced To It. With Changes In Volume.
b. Indirect Materials Are Generally Small c. Mixed Cost: A Mixed Cost Contains
Items Of Material Such As Glue And Nails. They BothVariable And Fixed Cost Elements.
May Be An Integral Part Of A Finished Product
ButTheir Costs Can Be Traced To The Product 1-5
Only At Great Cost Or Inconvenience. a. Unit Fixed Costs Decrease As The Activity
c. Direct Labor Consists Of Labor Costs LevelIncreases.
ThatCan Be Easily Traced To Particular b. Unit Variable Costs Remain Constant As
Products. TheActivity Level Increases.
Direct Labor Is Also Called ―Touch Labor.‖ c. Total Fixed Costs Remain Constant As
d. Indirect Labor Consists Of The Labor TheActivity Level Increases.
CostsOf Janitors, Supervisors, Materials d. Total Variable Costs Increase As The
Handlers, AndOther Factory Workers That ActivityLevel Increases.
Cannot Be Conveniently Traced To Particular
Products. These Labor Costs Are Incurred To 1-6
Support Production, But The Workers Involved a. Cost Behavior: Cost Behavior Refers To
Do Not Directly Work On The Product. The Way In Which Costs Change In
e. Manufacturing Overhead Includes All Response To Changes In A Measure Of
Manufacturing Costs Except Direct Materials Activity Such As Sales Volume, Production
AndDirect Labor. Consequently, Manufacturing Volume, Or OrdersProcessed.
Overhead Includes Indirect Materials And b. Relevant Range: The Relevant Range Is
IndirectLabor As Well As Other Manufacturing TheRange Of Activity Within Which
Costs. AssumptionsAbout Variable And Fixed
Cost Behavior AreValid.
1-3 A Product Cost Is Any Cost Involved In
Purchasing Or Manufacturing Goods. In The 1-7 An Activity Base Is A Measure Of
CaseOf Manufactured Goods, These Costs Whatever Causes The Incurrence Of A
Consist Of Direct Materials, Direct Labor, And VariableCost. Examples Of Activity Bases
ManufacturingOverhead. A Period Cost Is A Include UnitsProduced, Units Sold, Letters
Cost That Is Taken Directly To The Income Typed, Beds In AHospital, Meals Served In A
Statement As An Expense In The Period In Cafe, Service CallsMade, Etc.
Which It Is Incurred.
1-8 The Linear Assumption Is Reasonably
Valid Providing That The Cost Formula Is Used
OnlyWithin The Relevant Range.
, 1-11 The Traditional Approach Organizes
© Mcgraw Hill Llc. All Rights Reserved. No
CostsBy Function, Such As Production, Selling,
Reproduction Or Distribution Without The
And Administration. Within A Functional Area,
Prior Written ConsentOf Mcgraw Hill Llc.
Fixed And Variable Costs Are Intermingled. The
1-9 A Discretionary Fixed Cost Has A Contribution Approach Income Statement
Fairly Short Planning Horizon—Usually A Year. Organizes Costs By Behavior, First Deducting
Such Costs Arise From Annual Decisions By Variable Expenses To Obtain Contribution
Management To Spend On Certain Fixed Cost Margin,And Then Deducting Fixed Expenses To
Items, Such As Advertising, Research, And Obtain NetOperating Income.
Management Development. A Committed
FixedCost Has A Long Planning Horizon— 1-12 The Contribution Margin Is Total
Generally Many Years. Such Costs Relate To SalesRevenue Less Total Variable Expenses.
A Company’sInvestment In Facilities,
Equipment, And Basic Organization. Once 1-13 A Differential Cost Is A Cost That Differs
Such Costs Have Been Incurred, They Are Between Alternatives In A Decision. A Sunk
―Locked In‖ For Many Years. Cost Is A Cost That Has Already Been Incurred
And Cannot Be Altered By Any Decision Taken
1-10 Yes. As The Anticipated Level Of Activity Now Or In The Future. An Opportunity Cost Is
Changes, The Level Of Fixed Costs Needed To The PotentialBenefit That Is Given Up When
Support Operations May Also Change. Most One Alternative Is Selected Over Another.
FixedCosts Are Adjusted Upward And Downward
In Large Steps, Rather Than Being Absolutely 1-14 No, Differential Costs Can Be Either
Fixed AtOne Level For All Ranges Of Activity. Variable Or Fixed. For Example, The
Alternatives Might Consist Of Purchasing One
Machine RatherThan Another To Make A
Product. The Difference Between The Fixed
Costs Of Purchasing The Two Machines Is A
Differential Cost.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 1
Managerial Accounting,
By Ray Garrison, Eric Noreen And Peter Brewer,
18th Edition
,Table Of Contents
Chapter One: Managerial Accounting And Cost Concepts
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
Chapter Three: Job-Order Costing: Cost Flows And External Reporting
Chapter Four: Process Costing
Chapter Five: Cost-Volume-Profit Relationships
Chapter Six: Variable Costing And Segment Reporting: Tools For Management
Chapter Seven: Activity-Based Costing: A Tool To Aid Decision Making
Chapter Eight: Master Budgeting
Chapter Nine: Flexible Budgets And Performance Analysis
Chapter Ten: Standard Costs And Variances
Chapter Eleven: Responsibility Accounting Systems
Chapter Twelve: Strategic Performance Measurement
Chapter Thirteen: Differential Analysis: The Key To Decision Making
Chapter Fourteen: Capital Budgeting Decisions
Chapter Fifteen: Statement Of Cash Flows
Chapter Sixteen: Financial Statement Analysis
,Chapter 1
Managerial Accounting And Cost Concepts
Questions
1-1 The Three Major Types Of Product 1-4
CostsIn A Manufacturing Company Are Direct a. Variable Cost: The Variable Cost Per Unit
Materials, Direct Labor, And Manufacturing Is Constant, But Total Variable Cost
Overhead. Changes InDirect Proportion To Changes
In Volume.
1-2 b. Fixed Cost: The Total Fixed Cost Is
a. Direct Materials Are An Integral Part Of Constant Within The Relevant Range. The
AFinished Product And Their Costs Can Be Average FixedCost Per Unit Varies Inversely
Conveniently Traced To It. With Changes In Volume.
b. Indirect Materials Are Generally Small c. Mixed Cost: A Mixed Cost Contains
Items Of Material Such As Glue And Nails. They BothVariable And Fixed Cost Elements.
May Be An Integral Part Of A Finished Product
ButTheir Costs Can Be Traced To The Product 1-5
Only At Great Cost Or Inconvenience. a. Unit Fixed Costs Decrease As The Activity
c. Direct Labor Consists Of Labor Costs LevelIncreases.
ThatCan Be Easily Traced To Particular b. Unit Variable Costs Remain Constant As
Products. TheActivity Level Increases.
Direct Labor Is Also Called ―Touch Labor.‖ c. Total Fixed Costs Remain Constant As
d. Indirect Labor Consists Of The Labor TheActivity Level Increases.
CostsOf Janitors, Supervisors, Materials d. Total Variable Costs Increase As The
Handlers, AndOther Factory Workers That ActivityLevel Increases.
Cannot Be Conveniently Traced To Particular
Products. These Labor Costs Are Incurred To 1-6
Support Production, But The Workers Involved a. Cost Behavior: Cost Behavior Refers To
Do Not Directly Work On The Product. The Way In Which Costs Change In
e. Manufacturing Overhead Includes All Response To Changes In A Measure Of
Manufacturing Costs Except Direct Materials Activity Such As Sales Volume, Production
AndDirect Labor. Consequently, Manufacturing Volume, Or OrdersProcessed.
Overhead Includes Indirect Materials And b. Relevant Range: The Relevant Range Is
IndirectLabor As Well As Other Manufacturing TheRange Of Activity Within Which
Costs. AssumptionsAbout Variable And Fixed
Cost Behavior AreValid.
1-3 A Product Cost Is Any Cost Involved In
Purchasing Or Manufacturing Goods. In The 1-7 An Activity Base Is A Measure Of
CaseOf Manufactured Goods, These Costs Whatever Causes The Incurrence Of A
Consist Of Direct Materials, Direct Labor, And VariableCost. Examples Of Activity Bases
ManufacturingOverhead. A Period Cost Is A Include UnitsProduced, Units Sold, Letters
Cost That Is Taken Directly To The Income Typed, Beds In AHospital, Meals Served In A
Statement As An Expense In The Period In Cafe, Service CallsMade, Etc.
Which It Is Incurred.
1-8 The Linear Assumption Is Reasonably
Valid Providing That The Cost Formula Is Used
OnlyWithin The Relevant Range.
, 1-11 The Traditional Approach Organizes
© Mcgraw Hill Llc. All Rights Reserved. No
CostsBy Function, Such As Production, Selling,
Reproduction Or Distribution Without The
And Administration. Within A Functional Area,
Prior Written ConsentOf Mcgraw Hill Llc.
Fixed And Variable Costs Are Intermingled. The
1-9 A Discretionary Fixed Cost Has A Contribution Approach Income Statement
Fairly Short Planning Horizon—Usually A Year. Organizes Costs By Behavior, First Deducting
Such Costs Arise From Annual Decisions By Variable Expenses To Obtain Contribution
Management To Spend On Certain Fixed Cost Margin,And Then Deducting Fixed Expenses To
Items, Such As Advertising, Research, And Obtain NetOperating Income.
Management Development. A Committed
FixedCost Has A Long Planning Horizon— 1-12 The Contribution Margin Is Total
Generally Many Years. Such Costs Relate To SalesRevenue Less Total Variable Expenses.
A Company’sInvestment In Facilities,
Equipment, And Basic Organization. Once 1-13 A Differential Cost Is A Cost That Differs
Such Costs Have Been Incurred, They Are Between Alternatives In A Decision. A Sunk
―Locked In‖ For Many Years. Cost Is A Cost That Has Already Been Incurred
And Cannot Be Altered By Any Decision Taken
1-10 Yes. As The Anticipated Level Of Activity Now Or In The Future. An Opportunity Cost Is
Changes, The Level Of Fixed Costs Needed To The PotentialBenefit That Is Given Up When
Support Operations May Also Change. Most One Alternative Is Selected Over Another.
FixedCosts Are Adjusted Upward And Downward
In Large Steps, Rather Than Being Absolutely 1-14 No, Differential Costs Can Be Either
Fixed AtOne Level For All Ranges Of Activity. Variable Or Fixed. For Example, The
Alternatives Might Consist Of Purchasing One
Machine RatherThan Another To Make A
Product. The Difference Between The Fixed
Costs Of Purchasing The Two Machines Is A
Differential Cost.
Managerial Accounting 18th Edition, Solutions Manual, Chapter 1
