Solution Manual for Managerial Accounting,
ii ii ii ii
18th Edition ii
By Ray Garrison, Eric Noreen and Peter Brewer
ii ii ii ii ii ii ii
Verified Chapter's 1 - 16 | Complete
ii ii ii ii ii ii
,Table of Contents
ii ii
Chapter iiOne: iiManagerial iiAccounting iiand iiCost iiConcepts
Chapter iiTwo: iiJob-Order iiCosting: iiCalculating iiUnit iiProduct iiCosts
Chapter iiThree: iiJob-Order iiCosting: iiCost iiFlows iiand iiExternal iiReporting
Chapter iiFour: iiProcess iiCosting
Chapter iiFive: iiCost-Volume-Profit iiRelationships
Chapter iiSix: iiVariable iiCosting iiand iiSegment iiReporting: iiTools iifor iiManagement
Chapter iiSeven: iiActivity-Based iiCosting: iiA iiTool iito iiAid iiDecision iiMaking
Chapter iiEight: iiMaster iiBudgeting
Chapter iiNine: iiFlexible iiBudgets iiand iiPerformance iiAnalysis
Chapter iiTen: iiStandard iiCosts iiand iiVariances
Chapter iiEleven: iiResponsibility iiAccounting iiSystems
Chapter iiTwelve: iiStrategic iiPerformance iiMeasurement
Chapter iiThirteen: iiDifferential iiAnalysis: iiThe iiKey iito iiDecision iiMaking
Chapter iiFourteen: iiCapital iiBudgeting iiDecisions
Chapter iiFifteen: iiStatement iiof iiCash iiFlows
Chapter iiSixteen: iiFinancial iiStatement iiAnalysis
,Chapter 1 ii
Managerial Accounting and Cost Concepts
ii ii ii ii
Questions
1-1 The iithree iimajor iitypes iiof iiproduct ii which iiit iiis iiincurred.
iicosts iiin iia iimanufacturing iicompany iiare
iidirect iimaterials, iidirect iilabor, iiand
iimanufacturing iioverhead.
1-2
a. Direct iimaterials iiare iian iiintegral iipart iiof
iia iifinished iiproduct iiand iitheir iicosts iican iibe
iiconveniently iitraced iito iiit.
b. Indirect iimaterials iiare iigenerally iismall
iiitems iiof iimaterial iisuch iias iiglue iiand iinails.
iiThey iimay iibe iian iiintegral iipart iiof iia iifinished
iiproduct iibut iitheir iicosts iican iibe iitraced iito iithe
iiproduct iionly iiat iigreat iicost iior iiinconvenience.
c. Direct iilabor iiconsists iiof iilabor iicosts
iithat iican iibe iieasily iitraced iito iiparticular
iiproducts.
Direct iilabor iiis iialso iicalled ii―touch iilabor.‖
d. Indirect iilabor iiconsists iiof iithe iilabor
iicosts iiof iijanitors, iisupervisors, iimaterials
iihandlers, iiand iiother iifactory iiworkers iithat
iicannot iibe iiconveniently iitraced iito iiparticular
iiproducts. iiThese iilabor iicosts iiare iiincurred iito
iisupport iiproduction, iibut iithe iiworkers
iiinvolved iido iinot iidirectly iiwork iion iithe
iiproduct.
e. Manufacturing iioverhead iiincludes iiall
iimanufacturing iicosts iiexcept iidirect iimaterials
iiand iidirect iilabor. iiConsequently,
iimanufacturing iioverhead iincludes iiindirect
iimaterials iiand iiindirect iilabor iias iiwell iias iiother
iimanufacturing iicosts.
1-3 A iiproduct iicost iiis iiany iicost iiinvolved
iiin iipurchasing iior iimanufacturing iigoods. iiIn iithe
iicase iiof iimanufactured iigoods, iithese iicosts
iiconsist iiof iidirect iimaterials, iidirect iilabor, iand
iimanufacturing iioverhead. iiA iiperiod iicost iiis iia
iicost iithat iiis iitaken iidirectly iito iithe iiincome
iistatement iias iian iiexpense iiin iithe iiperiod iiin
, 1-4
a. Variable iicost: iiThe iivariable iicost iiper
iiunit iiis iiconstant, iibut iitotal iivariable iicost
iichanges iiin iidirect iiproportion iito
iichanges iiin iivolume.
b. Fixed iicost: iiThe iitotal iifixed iicost iiis
iiconstant iiwithin ithe irelevant irange. iThe
iiaverage ifixed iicost iiper iiunit iivaries
iiinversely iiwith iichanges i i in iivolume.
c. Mixed iicost: iiA iimixed iicost iicontains
iiboth iivariable iiand iifixed iicost
iielements.
1-5
a. Unit iifixed iicosts iidecrease iias iithe iiactivity
iilevel iiincreases.
b. Unit iivariable iicosts iiremain iiconstant iias
iithe iiactivity iilevel iiincreases.
c. Total iifixed iicosts iiremain iiconstant iias
iithe iiactivity iilevel iiincreases.
d. Total iivariable iicosts iiincrease iias iithe
iiactivity iilevel iiincreases.
1-6
a. Cost iibehavior: iiCost iibehavior iirefers iito
iithe iiway iiin iiwhich iicosts iichange iiin
iiresponse iito iichanges iiin iia iimeasure iiof
iiactivity iisuch iias iisales ivolume,
iiproduction ivolume, ior iorders iiprocessed.
b. Relevant iirange: iiThe iirelevant iirange iiis
iithe iirange iof iiactivity iwithin iiwhich
iiassumptions iiabout iivariable iiand iifixed
iicost iibehavior iiare iivalid.
1-7 An iiactivity iibase iiis iia iimeasure iiof
iiwhatever iicauses iithe iiincurrence iiof iia
iivariable iicost. iiExamples iiof iiactivity iibases
iiinclude iiunits iiproduced, iiunits iisold,
iiletters iityped, iibeds iiin iia iihospital, iimeals
iiserved iiin iia iicafe, iiservice iicalls iimade,
iietc.
1-8 The iilinear iiassumption iiis iireasonably
iivalid iiproviding iithat iithe iicost iiformula iiis iiused
iionly iiwithin iithe iirelevant iirange.
ii ii ii ii
18th Edition ii
By Ray Garrison, Eric Noreen and Peter Brewer
ii ii ii ii ii ii ii
Verified Chapter's 1 - 16 | Complete
ii ii ii ii ii ii
,Table of Contents
ii ii
Chapter iiOne: iiManagerial iiAccounting iiand iiCost iiConcepts
Chapter iiTwo: iiJob-Order iiCosting: iiCalculating iiUnit iiProduct iiCosts
Chapter iiThree: iiJob-Order iiCosting: iiCost iiFlows iiand iiExternal iiReporting
Chapter iiFour: iiProcess iiCosting
Chapter iiFive: iiCost-Volume-Profit iiRelationships
Chapter iiSix: iiVariable iiCosting iiand iiSegment iiReporting: iiTools iifor iiManagement
Chapter iiSeven: iiActivity-Based iiCosting: iiA iiTool iito iiAid iiDecision iiMaking
Chapter iiEight: iiMaster iiBudgeting
Chapter iiNine: iiFlexible iiBudgets iiand iiPerformance iiAnalysis
Chapter iiTen: iiStandard iiCosts iiand iiVariances
Chapter iiEleven: iiResponsibility iiAccounting iiSystems
Chapter iiTwelve: iiStrategic iiPerformance iiMeasurement
Chapter iiThirteen: iiDifferential iiAnalysis: iiThe iiKey iito iiDecision iiMaking
Chapter iiFourteen: iiCapital iiBudgeting iiDecisions
Chapter iiFifteen: iiStatement iiof iiCash iiFlows
Chapter iiSixteen: iiFinancial iiStatement iiAnalysis
,Chapter 1 ii
Managerial Accounting and Cost Concepts
ii ii ii ii
Questions
1-1 The iithree iimajor iitypes iiof iiproduct ii which iiit iiis iiincurred.
iicosts iiin iia iimanufacturing iicompany iiare
iidirect iimaterials, iidirect iilabor, iiand
iimanufacturing iioverhead.
1-2
a. Direct iimaterials iiare iian iiintegral iipart iiof
iia iifinished iiproduct iiand iitheir iicosts iican iibe
iiconveniently iitraced iito iiit.
b. Indirect iimaterials iiare iigenerally iismall
iiitems iiof iimaterial iisuch iias iiglue iiand iinails.
iiThey iimay iibe iian iiintegral iipart iiof iia iifinished
iiproduct iibut iitheir iicosts iican iibe iitraced iito iithe
iiproduct iionly iiat iigreat iicost iior iiinconvenience.
c. Direct iilabor iiconsists iiof iilabor iicosts
iithat iican iibe iieasily iitraced iito iiparticular
iiproducts.
Direct iilabor iiis iialso iicalled ii―touch iilabor.‖
d. Indirect iilabor iiconsists iiof iithe iilabor
iicosts iiof iijanitors, iisupervisors, iimaterials
iihandlers, iiand iiother iifactory iiworkers iithat
iicannot iibe iiconveniently iitraced iito iiparticular
iiproducts. iiThese iilabor iicosts iiare iiincurred iito
iisupport iiproduction, iibut iithe iiworkers
iiinvolved iido iinot iidirectly iiwork iion iithe
iiproduct.
e. Manufacturing iioverhead iiincludes iiall
iimanufacturing iicosts iiexcept iidirect iimaterials
iiand iidirect iilabor. iiConsequently,
iimanufacturing iioverhead iincludes iiindirect
iimaterials iiand iiindirect iilabor iias iiwell iias iiother
iimanufacturing iicosts.
1-3 A iiproduct iicost iiis iiany iicost iiinvolved
iiin iipurchasing iior iimanufacturing iigoods. iiIn iithe
iicase iiof iimanufactured iigoods, iithese iicosts
iiconsist iiof iidirect iimaterials, iidirect iilabor, iand
iimanufacturing iioverhead. iiA iiperiod iicost iiis iia
iicost iithat iiis iitaken iidirectly iito iithe iiincome
iistatement iias iian iiexpense iiin iithe iiperiod iiin
, 1-4
a. Variable iicost: iiThe iivariable iicost iiper
iiunit iiis iiconstant, iibut iitotal iivariable iicost
iichanges iiin iidirect iiproportion iito
iichanges iiin iivolume.
b. Fixed iicost: iiThe iitotal iifixed iicost iiis
iiconstant iiwithin ithe irelevant irange. iThe
iiaverage ifixed iicost iiper iiunit iivaries
iiinversely iiwith iichanges i i in iivolume.
c. Mixed iicost: iiA iimixed iicost iicontains
iiboth iivariable iiand iifixed iicost
iielements.
1-5
a. Unit iifixed iicosts iidecrease iias iithe iiactivity
iilevel iiincreases.
b. Unit iivariable iicosts iiremain iiconstant iias
iithe iiactivity iilevel iiincreases.
c. Total iifixed iicosts iiremain iiconstant iias
iithe iiactivity iilevel iiincreases.
d. Total iivariable iicosts iiincrease iias iithe
iiactivity iilevel iiincreases.
1-6
a. Cost iibehavior: iiCost iibehavior iirefers iito
iithe iiway iiin iiwhich iicosts iichange iiin
iiresponse iito iichanges iiin iia iimeasure iiof
iiactivity iisuch iias iisales ivolume,
iiproduction ivolume, ior iorders iiprocessed.
b. Relevant iirange: iiThe iirelevant iirange iiis
iithe iirange iof iiactivity iwithin iiwhich
iiassumptions iiabout iivariable iiand iifixed
iicost iibehavior iiare iivalid.
1-7 An iiactivity iibase iiis iia iimeasure iiof
iiwhatever iicauses iithe iiincurrence iiof iia
iivariable iicost. iiExamples iiof iiactivity iibases
iiinclude iiunits iiproduced, iiunits iisold,
iiletters iityped, iibeds iiin iia iihospital, iimeals
iiserved iiin iia iicafe, iiservice iicalls iimade,
iietc.
1-8 The iilinear iiassumption iiis iireasonably
iivalid iiproviding iithat iithe iicost iiformula iiis iiused
iionly iiwithin iithe iirelevant iirange.
