MANAGERIAL ACCOUNTING
17th Edition
ISBN: 9781264374069
Author: Garrison
Publisher: MCG
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Textbook Question
Chapter 1, Problem 8E
EXERCISE 1−8 Product Costs and Period Costs; Variable and Fixed Costs LO1−3, LO1−4
Refer to the data given in Exercise 1−7. Answer all questions independently.
Required:
- For financial accounting purposes, what is the total amount of product costs incurredto make 20,000 units?
- For financial accounting purposes, what is the total amount of period costs incurred tosell 20,000 units?
- For financial accounting purposes, what is the total amount of product costs incurredto make 22,000 units?
- For financial accounting purposes, what is the total amount of period costs incurred tosell 18,000 units?
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Atlanta Systems produces two different products, Product A, which sells for $450 per unit, and Product B, which sells for $800 per
unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours
as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the
activity drivers are as follows:
Usage by
Product A
Usage by
Product B
Cost
Design (Engineering Hours)
Machining (Machine Hours)
Inspection (Batches)
$ 190,000
$1,800,000
$
108
142
2,160
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160,000
42
38
8
Atlanta manufactures 12,500 units of Product A and 10,200 units of Product B per month. Each unit of Product A uses $100 of direct
materials and $45 of direct labor, while each unit of Product B uşes $140 of direct materials and $75 of direct labor.
Atlanta Systems produces two different products, Product A, which sells for $450 per unit, and Product B, which sells for $800 per
unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours
as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the
activity drivers are as follows:
Usage by
Product A
Usage by
Cost
Product B
Design (Engineering Hours)
Machining (Machine Hours)
Inspection (Batches)
$ 190,000
$1,800,000
$ 160,000
108
142
2,160
2,840
42
38
Atlanta manufactures 12,500 units of Product A and 10,200 units of Product B per month. Each unit of Product A uses $100 of direct
materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor.
Compute the following:
Operating income under variable (direct) costing method
Operating income under absorption costing method
Operating income under throughput costing method
Chapter 1 Solutions
MANAGERIAL ACCOUNTING
Ch. 1 - Prob. 1QCh. 1 - Define the following: (a) direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - Prob. 5QCh. 1 - Define the following terms: (a) cost behavior and...Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Prob. 8QCh. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...
Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 1 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 1 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 1 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 1 - Prob. 5ECh. 1 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 1 - Prob. 7ECh. 1 - EXERCISE 18 Product Costs and Period Costs;...Ch. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - EXERCISE 1—11 Cost Behavior; Contribution Format...Ch. 1 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 1 - Prob. 13ECh. 1 - EXERCISE 1-14 Cost Classification 1O1–2, LO1–3,...Ch. 1 - Prob. 15ECh. 1 - EXERCISE 1–16 Cost Classifications for Decision...Ch. 1 - EXERCISE 1-17 Classifying Variable and Fixed Costs...Ch. 1 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 1 - PROBLEM 1-19 Traditional and Contribution Format...Ch. 1 - PROBLEM 120 Variable and Fixed Costs; Subtleties...Ch. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - PROBLEM 123 Cost Classification LO11, LO13, LO14...Ch. 1 - PROBLEM 1-24 Different Cost Classifications for...Ch. 1 - Prob. 25PCh. 1 - CASE 1-26 Cost Classification and Cost Behavior...Ch. 1 - Prob. 27C
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