Prepare a direct materials purchases budget for march

Reference no: EM131977120

Problem

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:

Brand 1 106,000 two-liter bottles
Brand 2 81,000 two-liter bottles

In addition, assume that the concentrate costs $85 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 2012, assuming no changes between beginning and ending inventories for concentrate, bottles, and carbonated water. Enter all amounts as positive numbers. If required, round to the nearest whole number (except for unit price amounts).

Reference no: EM131977120

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