,ACCESS Test Bank for Managerial Accounting for Managers 6th EditionNoree
m m m m m m m m m m
n
Chapter 1 m
Managerial Accounting and Cost Concepts
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Questions
1-1 Themthreemmajormtypesmofmproductmcos 1-4
tsminmammanufacturingmcompanymaremdirectmmat a. Variablemcost:mThemvariablemcostmpermunitmi
erials,mdirectmlabor,mandmmanufacturingmoverhe smconstant,mbutmtotalmvariablemcostmchange
ad. sminmdirectmproportionmtomchangesminmvolum
e.
1-2 b. Fixedmcost:mThemtotalmfixedmcostmismconstant
a. Directmmaterialsmaremanmintegralmpartmof mwithinmthemrelevantmrange.mThemaveragemfix
mamfinishedmproductmandmtheirmcostsmcanmbemco edmcostmpermunitmvariesminverselymwithmchan
nvenientlymtracedmtomit. gesminmvolume.
b. Indirectmmaterialsmaremgenerallymsmallmite c. Mixedmcost:mAmmixedmcostmcontainsmbo
msmofmmaterialmsuchmasmgluemandmnails.mTheymm thmvariablemandmfixedmcostmelements.
aymbemanmintegralmpartmofmamfinishedmproductmbu
tmtheirmcostsmcanmbemtracedmtomthemproductmonlym 1-5
atmgreatmcostmorminconvenience. a. Unitmfixedmcostsmdecreasemasmthemactivitymlev
c. Directmlabormconsistsmofmlabormcostsmth elmincreases.
atmcanmbemeasilymtracedmtomparticularmproducts b. Unitmvariablemcostsmremainmconstantmasmt
.mDirectmlabormismalsomcalledm“touchmlabor.” hemactivitymlevelmincreases.
d. Indirectmlabormconsistsmofmthemlabormcost c. Totalmfixedmcostsmremainmconstantmasmt
smofmjanitors,msupervisors,mmaterialsmhandlers,ma hemactivitymlevelmincreases.
ndmothermfactorymworkersmthatmcannotmbemconv d. Totalmvariablemcostsmincreasemasmthemactivi
enientlymtracedmtomparticularmproducts.mTheseml tymlevelmincreases.
abormcostsmaremincurredmtomsupportmproduction
,mbutmthemworkersminvolvedmdomnotmdirectlymwo 1-6
rkmonmthemproduct. a. Costmbehavior:mCostmbehaviormrefersmtomth
e. Manufacturingmoverheadmincludesmallmma emwayminmwhichmcostsmchangeminmresponse
nufacturingmcostsmexceptmdirectmmaterialsmandmdi mtomchangesminmammeasuremofmactivitymsuch
rectmlabor.mConsequently,mmanufacturingmoverh masmsalesmvolume,mproductionmvolume,morm
eadmincludesmindirectmmaterialsmandmindirectmlabo ordersmprocessed.
rmasmwellmasmothermmanufacturingmcosts. b. Relevantmrange:mThemrelevantmrangemismth
emrangemofmactivitymwithinmwhichmassumpti
1-3 onsmaboutmvariablemandmfixedmcostmbehavi
Amproductmcostmismanymcostminvolvedminm ormaremvalid.
purchasingmormmanufacturingmgoods.mInmthemcas
emofmmanufacturedmgoods,mthesemcostsmconsistmo 1-7 Anmactivitymbasemismammeasuremofmw
fmdirectmmaterials,mdirectmlabor,mandmmanufactur hatevermcausesmthemincurrencemofmamvariablem
ingmoverhead.mAmperiodmcostmismamcostmthatmismta cost.mExamplesmofmactivitymbasesmincludemuni
kenmdirectlymtomthemincomemstatementmasmanmex tsmproduced,munitsmsold,mlettersmtyped,mbedsm
penseminmthemperiodminmwhichmitmismincurred. inmamhospital,mmealsmservedminmamcafe,mservic
emcallsmmade,metc.
1-8 Themlinearmassumptionmismreasonablymva
lidmprovidingmthatmthemcostmformulamismusedmonlym
withinmthemrelevantmrange.
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawm
HillmLLC.
1
SolutionsmManual,mChapterm1
mynursytest.store
,ACCESS Test Bank for Managerial Accounting for Managers 6th EditionNoree
m m m m m m m m m m
n
1-9 Amdiscretionarymfixedmcostmhasmamfairl 1-11 Themtraditionalmapproachmorganizesmcost
ymshortmplanningmhorizon— smbymfunction,msuchmasmproduction,mselling,mandm
usuallymamyear.mSuchmcostsmarisemfrommannual administration.mWithinmamfunctionalmarea,mfixedm
mdecisionsmbymmanagement mtomspendmonmcert andmvariablemcostsmaremintermingled.mThemcontri
ainmfixedmcostmitems,msuchmasmadvertising,mres butionmapproachmincomemstatementmorganizesmc
earch,mandmmanagementmdevelopment.mAmco ostsmbymbehavior,mfirstmdeductingmvariablemexpe
mmittedmfixedmcostmhasmamlongmplanningmhoriz nsesmtomobtainmcontributionmmargin,mandmthenmd
on— eductingmfixedmexpensesmtomobtainmnetmoperatin
generallymmanymyears.mSuchmcostsmrelatemtoma gmincome.
mcompany’sm investmentminmfacilities,mequipmen
t,mandmbasicmorganization.mOncemsuchmcostsmh 1-12 Themcontributionmmarginmismtotalmsal
avembeenmincurred,mtheymarem“lockedmin”mform esmrevenuemlessmtotalmvariablemexpenses.
manymyears.
1-13 Amdifferentialmcostmismamcostmthatmdiffe
1-10 Yes.mAsmthemanticipatedmlevelmofmactivity rsmbetweenmalternativesminmamdecision.mAnmopp
mchanges,mthemlevelmofmfixedmcostsmneededmtoms ortunitymcostmismthempotentialmbenefitmthatmismgi
upportmoperationsmmaymalsomchange.mMostmfixed venmupmwhenmonemalternativemismselectedmoverm
costsmaremadjustedmupwardmandmdownwardminml
m another.mAmsunkmcostmismamcostmthatmhasmalrea
argemsteps,mrathermthanmbeingmabsolutelymfixedm dymbeenmincurredmandmcannotmbemalteredmbyma
atmonemlevelmformallmrangesmofmactivity. nymdecisionmtakenmnowmorminmthemfuture.
1-14 No,mdifferentialmcostsmcanmbemeithermva
riablemormfixed.mFormexample,mthemalternativesm
mightmconsistmofmpurchasingmonemmachinemrath
ermthanmanothermtommakemamproduct.mThemdiffer
encembetweenmthemfixedmcostsmofmpurchasingmth
emtwommachinesmismamdifferentialmcost.
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawmHillmLLC.
2 ManagerialmAccountingmformManagers,m6thmedition
mynursytest.store
, ACCESS Test Bank for Managerial Accounting for Managers 6th EditionNoree
m m m m m m m m m m
n
Chapter 1: Applying Excel
m m m
The completed worksheet is shown below.
m m m m m
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawmHillmLLC.
SolutionsmManual,mChapterm1 3
mynursytest.store
m m m m m m m m m m
n
Chapter 1 m
Managerial Accounting and Cost Concepts
m m m m
Questions
1-1 Themthreemmajormtypesmofmproductmcos 1-4
tsminmammanufacturingmcompanymaremdirectmmat a. Variablemcost:mThemvariablemcostmpermunitmi
erials,mdirectmlabor,mandmmanufacturingmoverhe smconstant,mbutmtotalmvariablemcostmchange
ad. sminmdirectmproportionmtomchangesminmvolum
e.
1-2 b. Fixedmcost:mThemtotalmfixedmcostmismconstant
a. Directmmaterialsmaremanmintegralmpartmof mwithinmthemrelevantmrange.mThemaveragemfix
mamfinishedmproductmandmtheirmcostsmcanmbemco edmcostmpermunitmvariesminverselymwithmchan
nvenientlymtracedmtomit. gesminmvolume.
b. Indirectmmaterialsmaremgenerallymsmallmite c. Mixedmcost:mAmmixedmcostmcontainsmbo
msmofmmaterialmsuchmasmgluemandmnails.mTheymm thmvariablemandmfixedmcostmelements.
aymbemanmintegralmpartmofmamfinishedmproductmbu
tmtheirmcostsmcanmbemtracedmtomthemproductmonlym 1-5
atmgreatmcostmorminconvenience. a. Unitmfixedmcostsmdecreasemasmthemactivitymlev
c. Directmlabormconsistsmofmlabormcostsmth elmincreases.
atmcanmbemeasilymtracedmtomparticularmproducts b. Unitmvariablemcostsmremainmconstantmasmt
.mDirectmlabormismalsomcalledm“touchmlabor.” hemactivitymlevelmincreases.
d. Indirectmlabormconsistsmofmthemlabormcost c. Totalmfixedmcostsmremainmconstantmasmt
smofmjanitors,msupervisors,mmaterialsmhandlers,ma hemactivitymlevelmincreases.
ndmothermfactorymworkersmthatmcannotmbemconv d. Totalmvariablemcostsmincreasemasmthemactivi
enientlymtracedmtomparticularmproducts.mTheseml tymlevelmincreases.
abormcostsmaremincurredmtomsupportmproduction
,mbutmthemworkersminvolvedmdomnotmdirectlymwo 1-6
rkmonmthemproduct. a. Costmbehavior:mCostmbehaviormrefersmtomth
e. Manufacturingmoverheadmincludesmallmma emwayminmwhichmcostsmchangeminmresponse
nufacturingmcostsmexceptmdirectmmaterialsmandmdi mtomchangesminmammeasuremofmactivitymsuch
rectmlabor.mConsequently,mmanufacturingmoverh masmsalesmvolume,mproductionmvolume,morm
eadmincludesmindirectmmaterialsmandmindirectmlabo ordersmprocessed.
rmasmwellmasmothermmanufacturingmcosts. b. Relevantmrange:mThemrelevantmrangemismth
emrangemofmactivitymwithinmwhichmassumpti
1-3 onsmaboutmvariablemandmfixedmcostmbehavi
Amproductmcostmismanymcostminvolvedminm ormaremvalid.
purchasingmormmanufacturingmgoods.mInmthemcas
emofmmanufacturedmgoods,mthesemcostsmconsistmo 1-7 Anmactivitymbasemismammeasuremofmw
fmdirectmmaterials,mdirectmlabor,mandmmanufactur hatevermcausesmthemincurrencemofmamvariablem
ingmoverhead.mAmperiodmcostmismamcostmthatmismta cost.mExamplesmofmactivitymbasesmincludemuni
kenmdirectlymtomthemincomemstatementmasmanmex tsmproduced,munitsmsold,mlettersmtyped,mbedsm
penseminmthemperiodminmwhichmitmismincurred. inmamhospital,mmealsmservedminmamcafe,mservic
emcallsmmade,metc.
1-8 Themlinearmassumptionmismreasonablymva
lidmprovidingmthatmthemcostmformulamismusedmonlym
withinmthemrelevantmrange.
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawm
HillmLLC.
1
SolutionsmManual,mChapterm1
mynursytest.store
,ACCESS Test Bank for Managerial Accounting for Managers 6th EditionNoree
m m m m m m m m m m
n
1-9 Amdiscretionarymfixedmcostmhasmamfairl 1-11 Themtraditionalmapproachmorganizesmcost
ymshortmplanningmhorizon— smbymfunction,msuchmasmproduction,mselling,mandm
usuallymamyear.mSuchmcostsmarisemfrommannual administration.mWithinmamfunctionalmarea,mfixedm
mdecisionsmbymmanagement mtomspendmonmcert andmvariablemcostsmaremintermingled.mThemcontri
ainmfixedmcostmitems,msuchmasmadvertising,mres butionmapproachmincomemstatementmorganizesmc
earch,mandmmanagementmdevelopment.mAmco ostsmbymbehavior,mfirstmdeductingmvariablemexpe
mmittedmfixedmcostmhasmamlongmplanningmhoriz nsesmtomobtainmcontributionmmargin,mandmthenmd
on— eductingmfixedmexpensesmtomobtainmnetmoperatin
generallymmanymyears.mSuchmcostsmrelatemtoma gmincome.
mcompany’sm investmentminmfacilities,mequipmen
t,mandmbasicmorganization.mOncemsuchmcostsmh 1-12 Themcontributionmmarginmismtotalmsal
avembeenmincurred,mtheymarem“lockedmin”mform esmrevenuemlessmtotalmvariablemexpenses.
manymyears.
1-13 Amdifferentialmcostmismamcostmthatmdiffe
1-10 Yes.mAsmthemanticipatedmlevelmofmactivity rsmbetweenmalternativesminmamdecision.mAnmopp
mchanges,mthemlevelmofmfixedmcostsmneededmtoms ortunitymcostmismthempotentialmbenefitmthatmismgi
upportmoperationsmmaymalsomchange.mMostmfixed venmupmwhenmonemalternativemismselectedmoverm
costsmaremadjustedmupwardmandmdownwardminml
m another.mAmsunkmcostmismamcostmthatmhasmalrea
argemsteps,mrathermthanmbeingmabsolutelymfixedm dymbeenmincurredmandmcannotmbemalteredmbyma
atmonemlevelmformallmrangesmofmactivity. nymdecisionmtakenmnowmorminmthemfuture.
1-14 No,mdifferentialmcostsmcanmbemeithermva
riablemormfixed.mFormexample,mthemalternativesm
mightmconsistmofmpurchasingmonemmachinemrath
ermthanmanothermtommakemamproduct.mThemdiffer
encembetweenmthemfixedmcostsmofmpurchasingmth
emtwommachinesmismamdifferentialmcost.
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawmHillmLLC.
2 ManagerialmAccountingmformManagers,m6thmedition
mynursytest.store
, ACCESS Test Bank for Managerial Accounting for Managers 6th EditionNoree
m m m m m m m m m m
n
Chapter 1: Applying Excel
m m m
The completed worksheet is shown below.
m m m m m
©mMcGrawmHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconsentmofmMcGrawmHillmLLC.
SolutionsmManual,mChapterm1 3
mynursytest.store
