SOLUTION MANUAL FOR M m m m
ANAGERIAL ACCOUNTING 1 m m
th
8 EDITION BY RAY GARRIS
m m m m
ON, ERIC NOREEN AND PETE
m m m m
R BREWERR ALL CHAPTERS
m m m
INCLUDED 2023/2024.
m m
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
,Chapter 1 m
Managerial Accounting and Cost Concepts
m m m m
Questions
1-1 Themthreemmajor mtypesmofmproductmcost 1-4
sminmammanufacturingmcompany maremdirectmmat a . Variablemcost: mThemvariablemcostmpermunitmi
erials,mdirectmlabor,mandmmanufacturingmoverhe smconstant,mbutmtotalmvariablemcostmchange
ad. sminmdirectmproportionmtomchangesminmvolu
me.
1-2 b. Fixedmcost: mThemtotalmfixedmcostmismconstant
a . Directmmaterialsmaremanmintegralmpartmof mwithinmthemrelevantmrange.mThe maveragemfix
mamfinishedmproductmandmtheir mcosts mcanmbemco edmcostmpermunitmvariesminversely mwithmchan
nveniently mtracedmtomit. gesminmvolume.
b. Indirectmmaterialsmaremgenerally msmallmite c. Mixedmcost: mAmmixedmcostmcontainsmbot
msmofmmaterialmsuchmasmgluemandmnails.mThey mm hmvariablemandmfixedmcostmelements.
ay mbemanmintegralmpartmofmamfinishedmproductmbut
mtheir mcosts mcanmbemtracedmtomthemproductmonly m 1-5
atmgreatmcostmorminconvenience. a . Unitmfixedmcostsmdecreasemasmthemactivity mlev
c. Directmlabor mconsistsmofmlabormcostsmth elmincreases.
atmcanmbemeasily mtracedmtomparticular mproduct b. Unitmvariablemcostsmremainmconstantmasmth
s. emactivity mlevelmincreases.
Directmlabormismalsomcalledm―touchmlabor.‖ c. Totalmfixedmcostsmremainmconstantmasmth
d. Indirectmlabormconsistsmofmthemlabormcost emactivity mlevelmincreases.
smofmjanitors,msupervisors,mmaterialsmhandlers,m d. Totalmvariablemcostsmincreasemasmthemactivit
andmothermfactory mworkersmthatmcannotmbemcon y mlevelmincreases.
veniently mtracedmtomparticular mproducts.mThese
mlabor mcosts mare mincurredmtomsupportmproductio 1-6
n,mbutmthemworkersminvolvedmdomnotmdirectly mw a . Costmbehavior: mCostmbehavior mrefersmtomth
ork monmthemproduct. emway minmwhichmcostsmchangeminmresponse
e . Manufacturingmoverheadmincludesmallmma mtomchanges minmammeasure mofmactivity msuch
nufacturingmcostsmexceptmdirectmmaterialsmandmd masmsales mvolume,mproductionmvolume,mor mo
irectmlabor.mConsequently,mmanufacturingmoverh rdersmprocessed.
eadmincludesmindirectmmaterialsmandmindirectmlab b. Relevantmrange: mThemrelevantmrangemismth
ormasmwellmasmothermmanufacturingmcosts. emrangemofmactivity mwithinmwhichmassumpti
onsmaboutmvariablemandmfixedmcostmbehavi
1-3 ormaremvalid.
Amproductmcostmismany mcostminvolvedminm
purchasingmormmanufacturingmgoods.mInmthemcas 1-7 Anmactivity mbasemismammeasuremofmw
emofmmanufacturedmgoods,mthesemcostsmconsistm hatever mcausesmthemincurrencemofmamvariable
ofmdirectmmaterials,mdirectmlabor,mandmmanufactu mcost.mExamples mofmactivity mbases minclude mun
ringmoverhead.mAmperiodmcostmismamcostmthatmismt itsmproduced,munitsmsold,mlettersmtyped,mbeds
akenmdirectly mtomthemincomemstatementmasmanme minmamhospital,mmeals mservedminmamcafe,mservi
xpenseminmthemperiodminmwhichmitmismincurred. cemcallsmmade,metc.
1-8 Themlinear massumptionmismreasonably mva
lidmprovidingmthatmthemcostmformulamismusedmonly
mwithinmthemrelevantmrange.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
,©mMcGraw mHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmcons
entmofmMcGraw mHillmLLC.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
, 1-9 Amdiscretionary mfixedmcostmhasmamfairl 1-11 Themtraditionalmapproachmorganizesmcost
y mshortmplanningmhorizon— smby mfunction,msuchmasmproduction,mselling,mand
usually mamyear.mSuchmcostsmarisemfrommannual madministration. mWithinmamfunctionalmarea,mfixed
mdecisions mby mmanagementmtomspendmonmcert mandmvariable mcosts mare mintermingled. mThe mcont
ainmfixedmcostmitems,msuchmasmadvertising,mres ributionmapproachmincomemstatementmorganizesm
earch,mandmmanagementmdevelopment.mAmco costsmby mbehavior,mfirstmdeductingmvariablemexp
mmittedmfixedmcostmhasmamlongmplanningmhoriz ensesmtomobtainmcontributionmmargin,mandmthenm
on— deductingmfixedmexpensesmtomobtainmnetmoperati
generally mmany myears.mSuchmcostsmrelatemtoma ngmincome.
mcompany’s minvestmentminmfacilities,mequipme
nt,mandmbasicmorganization.mOncemsuchmcostsm 1-12 Themcontributionmmarginmismtotalmsale
havembeenmincurred,mthey marem―lockedmin‖mfor smrevenuemlessmtotalmvariablemexpenses.
mmany myears.
1-13 Amdifferentialmcostmismamcostmthatmdiffers
1-10 Yes.mAsmthemanticipatedmlevelmofmactivity mbetweenmalternatives minmamdecision.mAmsunk mcos
mchanges,mthemlevelmofmfixedmcosts mneededmtoms tm ismamcostmthatmhasmalready mbeenmincurredmand
upportmoperationsmmay malsomchange.mMostmfixed mcannotmbemalteredmby many mdecisionmtakenmnow m
mcosts mare madjustedmupwardmandmdownwardminml orminmthemfuture.mAnmopportunity mcostmismthempot
argemsteps,mrather mthanmbeingmabsolutely mfixedma entialmbenefitmthatmismgivenmupmwhenmonemaltern
tmonemlevelmformallmrangesmofmactivity. ativemismselectedmover manother.
1-14 No,mdifferentialmcostsmcanmbemeither mva
riablemormfixed.mFormexample,mthemalternatives m
mightmconsistmofmpurchasingmonemmachinemrath
ermthanmanother mtommakemamproduct.mThemdiffer
encembetweenmthemfixedmcostsmofmpurchasingmt
hemtwommachinesmismamdifferentialmcost.
©mMcGraw mHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconse
ntmofmMcGraw mHillmLLC.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m
1
ANAGERIAL ACCOUNTING 1 m m
th
8 EDITION BY RAY GARRIS
m m m m
ON, ERIC NOREEN AND PETE
m m m m
R BREWERR ALL CHAPTERS
m m m
INCLUDED 2023/2024.
m m
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
,Chapter 1 m
Managerial Accounting and Cost Concepts
m m m m
Questions
1-1 Themthreemmajor mtypesmofmproductmcost 1-4
sminmammanufacturingmcompany maremdirectmmat a . Variablemcost: mThemvariablemcostmpermunitmi
erials,mdirectmlabor,mandmmanufacturingmoverhe smconstant,mbutmtotalmvariablemcostmchange
ad. sminmdirectmproportionmtomchangesminmvolu
me.
1-2 b. Fixedmcost: mThemtotalmfixedmcostmismconstant
a . Directmmaterialsmaremanmintegralmpartmof mwithinmthemrelevantmrange.mThe maveragemfix
mamfinishedmproductmandmtheir mcosts mcanmbemco edmcostmpermunitmvariesminversely mwithmchan
nveniently mtracedmtomit. gesminmvolume.
b. Indirectmmaterialsmaremgenerally msmallmite c. Mixedmcost: mAmmixedmcostmcontainsmbot
msmofmmaterialmsuchmasmgluemandmnails.mThey mm hmvariablemandmfixedmcostmelements.
ay mbemanmintegralmpartmofmamfinishedmproductmbut
mtheir mcosts mcanmbemtracedmtomthemproductmonly m 1-5
atmgreatmcostmorminconvenience. a . Unitmfixedmcostsmdecreasemasmthemactivity mlev
c. Directmlabor mconsistsmofmlabormcostsmth elmincreases.
atmcanmbemeasily mtracedmtomparticular mproduct b. Unitmvariablemcostsmremainmconstantmasmth
s. emactivity mlevelmincreases.
Directmlabormismalsomcalledm―touchmlabor.‖ c. Totalmfixedmcostsmremainmconstantmasmth
d. Indirectmlabormconsistsmofmthemlabormcost emactivity mlevelmincreases.
smofmjanitors,msupervisors,mmaterialsmhandlers,m d. Totalmvariablemcostsmincreasemasmthemactivit
andmothermfactory mworkersmthatmcannotmbemcon y mlevelmincreases.
veniently mtracedmtomparticular mproducts.mThese
mlabor mcosts mare mincurredmtomsupportmproductio 1-6
n,mbutmthemworkersminvolvedmdomnotmdirectly mw a . Costmbehavior: mCostmbehavior mrefersmtomth
ork monmthemproduct. emway minmwhichmcostsmchangeminmresponse
e . Manufacturingmoverheadmincludesmallmma mtomchanges minmammeasure mofmactivity msuch
nufacturingmcostsmexceptmdirectmmaterialsmandmd masmsales mvolume,mproductionmvolume,mor mo
irectmlabor.mConsequently,mmanufacturingmoverh rdersmprocessed.
eadmincludesmindirectmmaterialsmandmindirectmlab b. Relevantmrange: mThemrelevantmrangemismth
ormasmwellmasmothermmanufacturingmcosts. emrangemofmactivity mwithinmwhichmassumpti
onsmaboutmvariablemandmfixedmcostmbehavi
1-3 ormaremvalid.
Amproductmcostmismany mcostminvolvedminm
purchasingmormmanufacturingmgoods.mInmthemcas 1-7 Anmactivity mbasemismammeasuremofmw
emofmmanufacturedmgoods,mthesemcostsmconsistm hatever mcausesmthemincurrencemofmamvariable
ofmdirectmmaterials,mdirectmlabor,mandmmanufactu mcost.mExamples mofmactivity mbases minclude mun
ringmoverhead.mAmperiodmcostmismamcostmthatmismt itsmproduced,munitsmsold,mlettersmtyped,mbeds
akenmdirectly mtomthemincomemstatementmasmanme minmamhospital,mmeals mservedminmamcafe,mservi
xpenseminmthemperiodminmwhichmitmismincurred. cemcallsmmade,metc.
1-8 Themlinear massumptionmismreasonably mva
lidmprovidingmthatmthemcostmformulamismusedmonly
mwithinmthemrelevantmrange.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
,©mMcGraw mHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmcons
entmofmMcGraw mHillmLLC.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m 1
1
, 1-9 Amdiscretionary mfixedmcostmhasmamfairl 1-11 Themtraditionalmapproachmorganizesmcost
y mshortmplanningmhorizon— smby mfunction,msuchmasmproduction,mselling,mand
usually mamyear.mSuchmcostsmarisemfrommannual madministration. mWithinmamfunctionalmarea,mfixed
mdecisions mby mmanagementmtomspendmonmcert mandmvariable mcosts mare mintermingled. mThe mcont
ainmfixedmcostmitems,msuchmasmadvertising,mres ributionmapproachmincomemstatementmorganizesm
earch,mandmmanagementmdevelopment.mAmco costsmby mbehavior,mfirstmdeductingmvariablemexp
mmittedmfixedmcostmhasmamlongmplanningmhoriz ensesmtomobtainmcontributionmmargin,mandmthenm
on— deductingmfixedmexpensesmtomobtainmnetmoperati
generally mmany myears.mSuchmcostsmrelatemtoma ngmincome.
mcompany’s minvestmentminmfacilities,mequipme
nt,mandmbasicmorganization.mOncemsuchmcostsm 1-12 Themcontributionmmarginmismtotalmsale
havembeenmincurred,mthey marem―lockedmin‖mfor smrevenuemlessmtotalmvariablemexpenses.
mmany myears.
1-13 Amdifferentialmcostmismamcostmthatmdiffers
1-10 Yes.mAsmthemanticipatedmlevelmofmactivity mbetweenmalternatives minmamdecision.mAmsunk mcos
mchanges,mthemlevelmofmfixedmcosts mneededmtoms tm ismamcostmthatmhasmalready mbeenmincurredmand
upportmoperationsmmay malsomchange.mMostmfixed mcannotmbemalteredmby many mdecisionmtakenmnow m
mcosts mare madjustedmupwardmandmdownwardminml orminmthemfuture.mAnmopportunity mcostmismthempot
argemsteps,mrather mthanmbeingmabsolutely mfixedma entialmbenefitmthatmismgivenmupmwhenmonemaltern
tmonemlevelmformallmrangesmofmactivity. ativemismselectedmover manother.
1-14 No,mdifferentialmcostsmcanmbemeither mva
riablemormfixed.mFormexample,mthemalternatives m
mightmconsistmofmpurchasingmonemmachinemrath
ermthanmanother mtommakemamproduct.mThemdiffer
encembetweenmthemfixedmcostsmofmpurchasingmt
hemtwommachinesmismamdifferentialmcost.
©mMcGraw mHillmLLC.mAllmrightsmreserved.mNomreproductionmormdistributionmwithoutmthempriormwrittenmconse
ntmofmMcGraw mHillmLLC.
ManagerialmAccountingm18thmEdition,mSolutionsmManual,mChapter m
1
