Soda Company is the largest bottler in Western Europe. The company purchases Bra

Question

Soda Company is the largest bottler in Western Europe. The company purchases Brand 1 and Brand 2 concentrate from The Soda Company, dilutes and mixes the concentrate with carbonated water, and then fills the blended beverage into cans or plastic two-liter bottles. Assume that the estimated production for Brand 1 and Brand 2 two-liter bottles at the Wakefield, UK, bottling plant are as follows for the month of March:

In addition, assume that the concentrate costs $82 per pound for both Brand 1 and Brand 2 and is used at a rate of 0.15 pound per 100 liters of carbonated water in blending Brand 1 and 0.2 pound per 100 liters of carbonated water in blending Brand 2. Assume that two liters of carbonated water are used for each two-liter bottle of finished product. Assume further that two-liter bottles cost $0.10 per bottle and carbonated water costs $0.08 per liter.

Prepare a direct materials purchases budget for March 2014, assuming inventories are ignored, because there are no changes between beginning and ending inventories for concentrate, bottles, and carbonated water. If required, round to the nearest whole number (except for unit price amounts, which should be rounded to nearest cent if required).

Brand 1 133,000 two-liter bottles Brand 2 101,000 two-liter bottles

Explanation / Answer

Concentrate

2-Liter Bottles

Carbonated Water

Materials required for production:

Brand 1

lbs.

btls.

ltrs.

Brand 2

Total materials

lbs.

btls.

ltrs.

Direct materials unit price

x $

x $

x $

Total direct materials to be purchased

$

$

$

Concentrate required :

Brand 1 = [(133000 x 2 ) /100 ] x .15 x $82 = 32718

Brand 2 = [(101000 x 2 ) /100 ] x .2 x $82 = 33128

Concentrate

2-Liter Bottles

Carbonated Water

Materials required for production:

Brand 1

lbs.

btls.

ltrs.

Brand 2

Total materials

lbs.

btls.

ltrs.

Direct materials unit price

x $

x $

x $

Total direct materials to be purchased

$

$

$

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