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BLZ manufactures very strong bricks for walls and security installations. Each brick is sold for K20. In 2020 60,000 bricks have been produced of which 50,000 are expected to be sold by the year end. Budgeted and actual costs for the period are as follows: Budget Actual Direct production costs per brick Variable factory overhead per brick Fixed overheads K10 K10 K4 K4 K72,000 K78,000 Variable selling expenses, per brick Fixed selling expenses K1 K1 K10,000 K10,000 Fixed overheads are absorbed on the basis of normal production. There was no opening stock at the beginning of the year, as 2020 is BLZ's first year of production. BLZ decide to monitor its cash flow. They also wishes to draw up a budget for 2021, the second year of trading. They estimate that sales will increase to 100,000 bricks, and they assume that the closing stock at the end of 2021 will be 20,000 bricks and that there will be no closing stock of raw materials. Sales and costs are expected to arise evenly over the year. Debtors for sales pay three months in arrears. Variable production overheads are paid three months in arrears. All other costs are paid as they occur. Selling prices and unit costs are expected to remain as in 2020, with the exception of fixed production overhead which are expected to increases to K80,000 in total. BLZ expect to have an overdraft K10,000 by the end of 2020.

BLZ manufactures very strong bricks for walls and security installations. Each brick is sold for K20. In 2020 60,000 bricks have been produced of which 50,000 are expected to be sold by the year end. Budgeted and actual costs for the period are as follows: Budget Actual Direct production costs per brick Variable factory overhead per brick Fixed overheads K10 K10 K4 K4 K72,000 K78,000 Variable selling expenses, per brick Fixed selling expenses K1 K1 K10,000 K10,000 Fixed overheads are absorbed on the basis of normal production. There was no opening stock at the beginning of the year, as 2020 is BLZ's first year of production. BLZ decide to monitor its cash flow. They also wishes to draw up a budget for 2021, the second year of trading. They estimate that sales will increase to 100,000 bricks, and they assume that the closing stock at the end of 2021 will be 20,000 bricks and that there will be no closing stock of raw materials. Sales and costs are expected to arise evenly over the year. Debtors for sales pay three months in arrears. Variable production overheads are paid three months in arrears. All other costs are paid as they occur. Selling prices and unit costs are expected to remain as in 2020, with the exception of fixed production overhead which are expected to increases to K80,000 in total. BLZ expect to have an overdraft K10,000 by the end of 2020.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 6CE: Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following...
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Calculate BLZ profit for 2020 if marginal costing used

BLZ manufactures very strong bricks for walls and security installations. Each brick is sold for K20. In 2020 60,000 bricks have been produced of which 50,000 are expected to be sold by the year end. Budgeted and actual costs for the period are as follows: Budget Actual Direct production costs per brick Variable factory overhead per brick K10 K10 K4 К4 Fixed overheads K72,000 K78,000 Variable selling expenses, per brick Fixed selling expenses K1 K1 K10,000 K10,000 Fixed overheads are absorbed on the basis of normal production. There was no opening stock at the beginning of the year, as 2020 is BLZ's first year of production. BLZ decide to monitor its cash flow. They also wishes to draw up a budget for 2021, the second year of trading. They estimate that sales will increase to 100,000 bricks, and they assume that the closing stock at the end of 2021 will be 20,000 bricks and that there will be no closing stock of raw materials. Sales and costs are expected to arise evenly over the year. Debtors for sales pay three months in arrears. Variable production overheads are paid three months in arrears. All other costs are paid as they occur. Selling prices and unit costs are expected to remain as in 2020, with the exception of fixed production overhead which are expected to increases to K80,000 in total. BLZ expect to have an overdraft K10,000 by the end of 2020.
Transcribed Image Text:BLZ manufactures very strong bricks for walls and security installations. Each brick is sold for K20. In 2020 60,000 bricks have been produced of which 50,000 are expected to be sold by the year end. Budgeted and actual costs for the period are as follows: Budget Actual Direct production costs per brick Variable factory overhead per brick K10 K10 K4 К4 Fixed overheads K72,000 K78,000 Variable selling expenses, per brick Fixed selling expenses K1 K1 K10,000 K10,000 Fixed overheads are absorbed on the basis of normal production. There was no opening stock at the beginning of the year, as 2020 is BLZ's first year of production. BLZ decide to monitor its cash flow. They also wishes to draw up a budget for 2021, the second year of trading. They estimate that sales will increase to 100,000 bricks, and they assume that the closing stock at the end of 2021 will be 20,000 bricks and that there will be no closing stock of raw materials. Sales and costs are expected to arise evenly over the year. Debtors for sales pay three months in arrears. Variable production overheads are paid three months in arrears. All other costs are paid as they occur. Selling prices and unit costs are expected to remain as in 2020, with the exception of fixed production overhead which are expected to increases to K80,000 in total. BLZ expect to have an overdraft K10,000 by the end of 2020.
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