Solutions Manual for Managerial Accounting 18th Edition by Ray Garrison, Eric Noreen, and Peter Brewer

Solution Manual for Managerial Accounting,
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18th Editionb




By Ray Garrison, Eric Noreen and Peter Brewer
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Verified Chapter's 1 - 16 | Complete
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,Table of Contents b b




Chapter One: Managerial Accounting and Cost Concepts
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Chapter Two: Job-Order Costing: Calculating Unit Product Costs
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Chapter Three: Job-Order Costing: Cost Flows and External Reporting
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Chapter Four: Process Costing
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Chapter Five: Cost-Volume-Profit Relationships
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Chapter Six: Variable Costing and Segment Reporting: Tools for Management
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Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
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Chapter Eight: Master Budgeting
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Chapter Nine: Flexible Budgets and Performance Analysis
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Chapter Ten: Standard Costs and Variances
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Chapter Eleven: Responsibility Accounting Systems
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Chapter Twelve: Strategic Performance Measurement
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Chapter Thirteen: Differential Analysis: The Key to Decision Making
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Chapter Fourteen: Capital Budgeting Decisions
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Chapter Fifteen: Statement of Cash Flows
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Chapter Sixteen: Financial Statement Analysis
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,Chapter 1 b




Managerial Accounting and Cost Concepts b b b b




Questions


1-1 The three major types of product costs in b b b b b b b 1-4
a manufacturing company are direct materials,
b b b b b b a. Variable cost: The variable cost per unit is b b b b b b b




direct labor, and manufacturing overhead.
b b b b b constant, but total variable cost changes in
b b b b b b b




direct proportion to changes in volume.
b b b b b b




1-2 b. Fixed cost: The total fixed cost is constant
b b b b b b b




a. Direct materials are an integral part of a b b b b b b b within the relevant range. The averagefixed
b b b b b b b




finished product and their costs can be
b b b b b b b cost per unit varies inversely with changes in
b b b b b b b b




conveniently traced to it.
b b b b volume.
b




b. Indirect materials are generally small items b b b b b c. Mixed cost: A mixed cost contains both b b b b b b




of material such as glue and nails. They may be an
b b b b b b b b b b b variable and fixed cost elements.
b b b b b




integral part of a finished product but their costs
b b b b b b b b b




can be traced to the product only at great cost or
b b b b b b b b b b b 1-5
inconvenience.
b a. Unit fixed costs decrease as the activity level
b b b b b b b




c. Direct labor consists of labor costs that b b b b b b increases.
b




can be easily traced to particular products.
b b b b b b b b. Unit variable costs remain constant as the
b b b b b b




Direct labor is also called ―touch labor.‖
b b b b b b activity level increases.
b b b




d. Indirect labor consists of the labor costs of b b b b b b b c. Total fixed costs remain constant as the
b b b b b b




janitors, supervisors, materials handlers, and
b b b b b activity level increases.
b b b




other factory workers that cannot be
b b b b b b d. Total variable costs increase as the activity
b b b b b b




conveniently traced to particular products.
b b b b b level increases.
b b




These labor costs are incurred to support
b b b b b b b




production, but the workers involved do not
b b b b b b b 1-6
directly work on the product.
b b b b b a. Cost behavior: Cost behavior refers to the
b b b b b b




e. Manufacturing overhead includes all b b b way in which costs change in response to
b b b b b b b b




manufacturing costs except direct materials and
b b b b b b changes in a measure of activity such as
b b b b b b b b




direct labor. Consequently, manufacturing
b b b b sales volume, production volume, or orders
b b b b b b




overhead includes indirect materials and indirect
b b b b b b processed.
b




labor as well as other manufacturing costs.
b b b b b b b b. Relevant range: The relevant range is the b b b b b b




range of activity within which assumptions
b b b b b b




1-3 A product cost is any cost involved in b b b b b b b about variable and fixed cost behavior are
b b b b b b b




purchasing or manufacturing goods. In the case of
b b b b b b b b valid.
b




manufactured goods, these costs consist of direct
b b b b b b b




materials, direct labor, and manufacturing
b b b b b 1-7 An activity base is a measure of b b b b b b




overhead. A period cost is a cost that is taken
b b b b b b b b b b whatever causes the incurrence of a variable
b b b b b b b




directly to the income statement as an expense in
b b b b b b b b b cost. Examples of activity bases include units
b b b b b b b




the period in which it is incurred.
b b b b b b b produced, units sold, letters typed, beds in a
b b b b b b b b




hospital, meals served in a cafe, service calls
b b b b b b b b




made, etc.
b b




1-8 The linear assumption is reasonably valid b b b b b

, providing that the cost formula is used only within
b b b b b b b b b




the relevant range.
b b b