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CMI Learning Outcomes - ILO Mapped with Different Types of Costs, Manufacturing Budgeting, Desk Manu

 CMI learning Outcomes

Mapped with ILO’S


1.      Understand the different types of costs

2.      Different costs for different purposes

3.      How to use cost information in decision making

1.      Whippany manufacturing wants to estimate costs for each product they produce at its Troy plant. The Troy plant produces three products at this plant, and runs two flexible assembly lines. Each assembly line can produce all three products. Classify each of the following costs as either ;

a)      Direct or indirect costs for each product.

b)     Fixed or variable with respect to the number of units produced of each product.

Each question carries 1mark.  (5Marks)






Assembly line labor wages


Plant manager's wages


Depreciation on the assembly line equipment


Component parts for the product


Wages of security personnel for the factory

2.      The Alex Miller Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:

Budgeted costs of the operating the plant for 10,000 to 20,000 hours:

      Fixed operating costs per year   $280,000

      Variable operating costs  $10  per hour

Practical capacity 20,000  hours per year

Budgeted long-run usage per year:

Lamp Division 800 hours × 12 months = 9,600  hours per year

Flashlight Division 450 hours × 12 months = 5,400  hours per year

Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Lamp Division was 700 hours and the Flashlight Division was 400 hours for the month of June.


a.   Determine the operating cost that will be budgeted for the lamp and flash light division each month using single rate cost allocation method.(4Marks)

b.   For the month of June, if a single-rate cost-allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume actual usage is used to allocate operating costs. (2marks)

Each step carries 1 mark.

3.      Classic Products Company manufactures colonial style desks. Some of the company's data was misplaced. Use the following information to replace the lost data: :(6Marks)

Actual Results

Flexible Budget Variances

Flexible Budget

Sales-Volume Variances

Static Budget

Units sold






$5,000 F


$6,260 U


Variable costs


$890 U


$10,800 F


Fixed costs


$3,740 F




Operating income






Determine the following:   Each question carries 1 mark

a.   Flexible-budget revenues (A)?

b.   Static-budget revenues (B)?

c.   Actual variable costs (C)?

d.   Total flexible-budget variance (D)?

e.   Total sales-volume variance (E)?

f.    Total static-budget variance?

4.      Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year:

                                                                      Machining     Assembly

            Direct labor-hours                             10,000 dlh      90,000 dlh

            Machine-hours                                100,000 mh        5,000 mh

            Direct labor cost                             $ 80,000         $720,000

            Manufacturing overhead costs   $250,000         $360,000

The accounting records of the company show the following data for Job #846:

                                                                     Machining     Assembly

            Direct labor-hours                                    50 dlh           120 dlh

            Machine-hours                                       170 mh             10 mh

            Direct material cost                           $2,700             $1,600

            Direct labor cost                                  $ 400               $ 900


a.   Compute the manufacturing overhead allocation rate for each department. (2Marks)

b.   Compute the total cost of Job #846.(2Marks) 

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