Survey of Accounting (Accounting I)
Solutions
Survey of Accounting (Accounting I)
Direct materials purchases budget
Coca-Cola Enterprises is the largest bottler of Coca-Cola® in North America. The company purchases Coke® and Sprite® concentrate from The Coca-Cola 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 Coke and Sprite two-liter bottles at the Dallas, Texas, bottling plant are as follows for the month of October:
In addition, assume that the concentrate costs $75 per pound for Coke and Sprite. The concentrate is used at a rate of 0.20 pound per 100 liters of carlxmated water in blending Coke and at a rate of 0.15 pound per 100 liters of carlxmated water in blending Sprite. Assume that two-liter bottles cost $0.04 per bottle and carlxmated water costs $0.03 per liter.
Prepare a direct materials purchases budget for October, assuming no changes between beginning and ending inventories for all three materials.
Concept Introduction:
Budgets:
Budgets are prepared to estimate the revenue, costs, receipts and payments for the business. There are several types of budgets prepared for a business. Few major types of budgets prepared are as follows:
- Sales budget
- Cash Collection budget
- Production budget
- Raw material purchase budget
- Expenses Budgets
- Cash disbursement budget
To Prepare:
The Direct Material Purchases Budget
The Direct Material Purchases Budget is prepared as follows:
| Concentrate | Carbonated Water | Bottle | |
| Coke: | |||
| Number of Bottles | 1,500,000 | 1,500,000 | 1,500,000 |
| Material Cost per bottle | $ 0.30 | $ 0.03 | $ 0.04 |
| (0.2*2/100)*$75 | |||
| Purchase Cost | $ 450,000 | $ 45,000 | $ 60,000 |
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