Answered: 7. Soda Company is the largest bottler…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 34BEB

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7. 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 May:

Transcribed Image Text:production for Brand 1 and Brand 2 two-liter bottles at the Wakefield, UK, bottling plant are as follows for the month of May: Brand 1 64,000 two-liter bottles Brand 2 49,000 two-liter bottles In addition, assume that the concentrate costs $62 per pound for both Brand 1 and Brand 2 and is used at a rate of 0.2 pound per 100 liters of carbonated water in blending Brand 1 and 0.25 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 $0.071 per bottle and carbonated water costs $0.051 per liter. Prepare a direct materials purchases budget for May, 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). Soda Company-Wakefield Plant Direct Materials Purchases Budget For the Month Ending May 31 (assumed data) Concentrate 2-Liter Bottles Carbonated Water Materials required for production: Ibs. btls. Itrs. Brand 1 Brand 2 Total materials required Ibs. btls. Itrs. Unit price Total direct materials to be purchased

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