Solution Manual for Managerial Accounting,
c c c c
18th Editionc
By Ray Garrison, Eric Noreen and Peter Brewer
c c c c c c c
Verified Chapter's 1 - 16 | Complete
c c c c c c
,Table of Contents
c c
Chapter One: Managerial Accounting and Cost Concepts
c c c c c c
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
c c c c c c c
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
c c c c c c c c
Chapter Four: Process Costing
c c c
Chapter Five: Cost-Volume-Profit Relationships
c c c
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
c c c c c c c c c
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
c c c c c c c c c
Chapter Eight: Master Budgeting
c c c
Chapter Nine: Flexible Budgets and Performance Analysis
c c c c c c
Chapter Ten: Standard Costs and Variances
c c c c c
Chapter Eleven: Responsibility Accounting Systems
c c c c
Chapter Twelve: Strategic Performance Measurement
c c c c
Chapter Thirteen: Differential Analysis: The Key to Decision Making
c c c c c c c c
Chapter Fourteen: Capital Budgeting Decisions
c c c c
Chapter Fifteen: Statement of Cash Flows
c c c c c
Chapter Sixteen: Financial Statement Analysis
c c c c
,Chapter 1 c
Managerial Accounting and Cost Concepts c c c c
Questions
1-1 The three major types of product costs c c c c c c 1-4
in a manufacturing company are direct
c c c c c c a. Variable cost: The variable cost per unit is
c c c c c c c
materials, direct labor, and manufacturing
c c c c c constant, but total variable cost changes in
c c c c c c c
overhead.
c direct proportion to changes in volume.
c c c c c c
b. Fixed cost: The total fixed cost is constant
c c c c c c c
1-2 within the relevant range. The average fixed
c c c c c c c
a. Direct materials are an integral part of a c c c c c c c cost per unit varies inversely with changes
c c c c c c c
finished product and their costs can be
c c c c c c c in volume.
c c
conveniently traced to it.
c c c c c. Mixed cost: A mixed cost contains both
c c c c c c
b. Indirect materials are generally small c c c c variable and fixed cost elements.
c c c c c
items of material such as glue and nails. They
c c c c c c c c c
may be an integral part of a finished product but
c c c c c c c c c c 1-5
their costs can be traced to the product only at
c c c c c c c c c c a. Unit fixed costs decrease as the activity level
c c c c c c c
great cost or inconvenience.
c c c c increases.
c
c. Direct labor consists of labor costs that c c c c c c b. Unit variable costs remain constant as the
c c c c c c
can be easily traced to particular products.
c c c c c c c activity level increases.
c c c
Direct labor is also called ―touch labor.‖
c c c c c c c. Total fixed costs remain constant as the
c c c c c c
d. Indirect labor consists of the labor costs c c c c c c activity level increases.
c c c
of janitors, supervisors, materials handlers, and
c c c c c c d. Total variable costs increase as the activity
c c c c c c
other factory workers that cannot be
c c c c c c level increases.
c c
conveniently traced to particular products.
c c c c c
These labor costs are incurred to support
c c c c c c c 1-6
production, but the workers involved do not
c c c c c c c a. Cost behavior: Cost behavior refers to the
c c c c c c
directly work on the product.
c c c c c way in which costs change in response to
c c c c c c c c
e. Manufacturing overhead includes all c c c changes in a measure of activity such as
c c c c c c c c
manufacturing costs except direct materials and
c c c c c c sales volume, production volume, or orders
c c c c c c
direct labor. Consequently, manufacturing
c c c c processed.
c
overhead includes indirect materials and indirect
c c c c c c b. Relevant range: The relevant range is the c c c c c c
labor as well as other manufacturing costs.
c c c c c c c range of activity within which assumptions
c c c c c c
about variable and fixed cost behavior are
c c c c c c c
1-3 A product cost is any cost involved in
c c c c c c c valid.
c
purchasing or manufacturing goods. In the case
c c c c c c c
of manufactured goods, these costs consist of
c c c c c c c 1-7 An activity base is a measure of
c c c c c c
direct materials, direct labor, and manufacturing
c c c c c c whatever causes the incurrence of a variable
c c c c c c c
overhead. A period cost is a cost that is taken
c c c c c c c c c c cost. Examples of activity bases include units
c c c c c c c
directly to the income statement as an expense
c c c c c c c c produced, units sold, letters typed, beds in a
c c c c c c c c
in the period in which it is incurred.
c c c c c c c c hospital, meals served in a cafe, service calls
c c c c c c c c
made, etc.
c c
1-8 The linear assumption is reasonably
c c c c
, valid providing that the cost formula is used
c c c c c c c c
only within the relevant range.
c c c c c
c c c c
18th Editionc
By Ray Garrison, Eric Noreen and Peter Brewer
c c c c c c c
Verified Chapter's 1 - 16 | Complete
c c c c c c
,Table of Contents
c c
Chapter One: Managerial Accounting and Cost Concepts
c c c c c c
Chapter Two: Job-Order Costing: Calculating Unit Product Costs
c c c c c c c
Chapter Three: Job-Order Costing: Cost Flows and External Reporting
c c c c c c c c
Chapter Four: Process Costing
c c c
Chapter Five: Cost-Volume-Profit Relationships
c c c
Chapter Six: Variable Costing and Segment Reporting: Tools for Management
c c c c c c c c c
Chapter Seven: Activity-Based Costing: A Tool to Aid Decision Making
c c c c c c c c c
Chapter Eight: Master Budgeting
c c c
Chapter Nine: Flexible Budgets and Performance Analysis
c c c c c c
Chapter Ten: Standard Costs and Variances
c c c c c
Chapter Eleven: Responsibility Accounting Systems
c c c c
Chapter Twelve: Strategic Performance Measurement
c c c c
Chapter Thirteen: Differential Analysis: The Key to Decision Making
c c c c c c c c
Chapter Fourteen: Capital Budgeting Decisions
c c c c
Chapter Fifteen: Statement of Cash Flows
c c c c c
Chapter Sixteen: Financial Statement Analysis
c c c c
,Chapter 1 c
Managerial Accounting and Cost Concepts c c c c
Questions
1-1 The three major types of product costs c c c c c c 1-4
in a manufacturing company are direct
c c c c c c a. Variable cost: The variable cost per unit is
c c c c c c c
materials, direct labor, and manufacturing
c c c c c constant, but total variable cost changes in
c c c c c c c
overhead.
c direct proportion to changes in volume.
c c c c c c
b. Fixed cost: The total fixed cost is constant
c c c c c c c
1-2 within the relevant range. The average fixed
c c c c c c c
a. Direct materials are an integral part of a c c c c c c c cost per unit varies inversely with changes
c c c c c c c
finished product and their costs can be
c c c c c c c in volume.
c c
conveniently traced to it.
c c c c c. Mixed cost: A mixed cost contains both
c c c c c c
b. Indirect materials are generally small c c c c variable and fixed cost elements.
c c c c c
items of material such as glue and nails. They
c c c c c c c c c
may be an integral part of a finished product but
c c c c c c c c c c 1-5
their costs can be traced to the product only at
c c c c c c c c c c a. Unit fixed costs decrease as the activity level
c c c c c c c
great cost or inconvenience.
c c c c increases.
c
c. Direct labor consists of labor costs that c c c c c c b. Unit variable costs remain constant as the
c c c c c c
can be easily traced to particular products.
c c c c c c c activity level increases.
c c c
Direct labor is also called ―touch labor.‖
c c c c c c c. Total fixed costs remain constant as the
c c c c c c
d. Indirect labor consists of the labor costs c c c c c c activity level increases.
c c c
of janitors, supervisors, materials handlers, and
c c c c c c d. Total variable costs increase as the activity
c c c c c c
other factory workers that cannot be
c c c c c c level increases.
c c
conveniently traced to particular products.
c c c c c
These labor costs are incurred to support
c c c c c c c 1-6
production, but the workers involved do not
c c c c c c c a. Cost behavior: Cost behavior refers to the
c c c c c c
directly work on the product.
c c c c c way in which costs change in response to
c c c c c c c c
e. Manufacturing overhead includes all c c c changes in a measure of activity such as
c c c c c c c c
manufacturing costs except direct materials and
c c c c c c sales volume, production volume, or orders
c c c c c c
direct labor. Consequently, manufacturing
c c c c processed.
c
overhead includes indirect materials and indirect
c c c c c c b. Relevant range: The relevant range is the c c c c c c
labor as well as other manufacturing costs.
c c c c c c c range of activity within which assumptions
c c c c c c
about variable and fixed cost behavior are
c c c c c c c
1-3 A product cost is any cost involved in
c c c c c c c valid.
c
purchasing or manufacturing goods. In the case
c c c c c c c
of manufactured goods, these costs consist of
c c c c c c c 1-7 An activity base is a measure of
c c c c c c
direct materials, direct labor, and manufacturing
c c c c c c whatever causes the incurrence of a variable
c c c c c c c
overhead. A period cost is a cost that is taken
c c c c c c c c c c cost. Examples of activity bases include units
c c c c c c c
directly to the income statement as an expense
c c c c c c c c produced, units sold, letters typed, beds in a
c c c c c c c c
in the period in which it is incurred.
c c c c c c c c hospital, meals served in a cafe, service calls
c c c c c c c c
made, etc.
c c
1-8 The linear assumption is reasonably
c c c c
, valid providing that the cost formula is used
c c c c c c c c
only within the relevant range.
c c c c c
