Complete Solutions Manual for Introduction to Managerial Accounting, 9th Edition 9e by Peter Brewer, Ray Garrison and Eric Noreen. ISBN-13: 4439
Full Chapters Solutions Manual
CHAPTER ONE Managerial Accounting and Cost Concepts
CHAPTER TWO Job-Order Costing: Calculating UnitProduct Costs
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Solutions Manual, Chapter 1 1 Chapter 1 Managerial Accounting and Cost Concepts Questions 1-1 The three major types of product costs
in a manufacturing company are direc t
materials, direct labor, and manufacturing
overhead.
1-2
a.Direct materials are an integral part of a
finished product and their costs can be conveniently traced to it. b.Indirect materials are ge nerally small
items of material such as glue and nails. They may be an integral part of a finished product but their costs can be traced to the product only at great cost or inconvenience. c.Direct labor consists of labor costs that
can be easily traced to particular products. Direct labor is also called “touch labor.” d.Indirect labor consists of the labor cost
s
of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products. These labor costs are incurred to support production, but the workers involved do not directly work on the product. e.Manufacturing overhead includes all
manufacturing costs except direct materials and direct labor. Consequently, manufacturing overhead includes indirect materials and indirect labor as well as other manufacturing costs. 1-3 A product cost is any cost involved i
n
purchasing or manufacturing goods. In the case
of manufactured goods, these costs consist of
direct materials, direct labor, and manufacturi ng
overhead. A period cost is a cost that is taken
directly to the income statement as an expense
in the period in which it is incurred.1-4
a.Variable cost: The variable cost per unit isconstant, but total variable cost changes in
direct proportion to changes in volume.
b.Fixed cost: The total fixed cost is constantwithin the relevant range. The average fixed
cost per unit varies inversely with change s
in volume.
c.Mixed cost: A mixed cost contains both
variable and fixed cost elements.
1-5
a.Unit fixed costs d ecrease as the activity level
increases.
b.Unit variable costs remain constant as the
activity level increases.
c.Total fixed costs remain constant as the
activity level increases.
d.Total variable cost s increase as the activity
level i ncreases.
1-6
a.Cost behavior: Cost behavior refers to the
way in which costs change in response to
changes in a measure of activity such a s
sales volume, production volume, or order s
processed.
b.Relevant range: The relevant range is the
range of activity within which assumptio ns
about variable and fixed cost behavior arevalid.
1-7 An activity base is a measure of
whatever causes the incurrence of a variable
cost. Examples of activity bases include unit
s
produced, units sold, letters typed, beds in a
hospital, meals served in a cafe, service call s
made, etc.
1-8 The linear assumption is reasonably
valid providing that the cost formula is used only
within the relevant range.
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