Coca-Cola Enterprises (CCE) is the largest bottler of Coca-Cola® in Western Europe. The company purchases Coke® and Sprite® concentrate from The Coca-Cola Company (K0), 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 Wakefield, UK, bottling plant is as follows for the month of May: Coke 153,000 two-liter bottles Sprite 86,500 two-liter bottlesIn addition, assume that the concentrate costs $75 per pound for both Coke and Sprite and is used at a rate of 0.15 pound per 100 liters of carbonated water in blending Coke and 0.10 pound per 100 liters of carbonated water in blending Sprite. Assume that two liters of carbonated water are used for each two-liter bottle of finished product. Assume further that two-liter bottles cost $0.08 per bottle and carbonated water costs $0.06 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. Coca-Cola Enterprises-Wakefield Plant Direct Materials Purchases Budget For the Month Ending May 31 (assumed data) Concentrate 2-Liter Bottles Carbonated Water Materials required for production: Coke® Sprite® Total materials Direct materials unit price x x x Total direct materials to be purchased
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Materials Purchases Budget
Coca-Cola Enterprises (CCE) is the largest bottler of Coca-Cola® in Western Europe. The company purchases Coke® and Sprite® concentrate from The Coca-Cola Company (K0), 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 Wakefield, UK, bottling plant is as follows for the month of May:
Coke | 153,000 two-liter bottles |
Sprite | 86,500 two-liter bottles |
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.
Coca-Cola Enterprises-Wakefield Plant | |||
Direct Materials Purchases Budget | |||
For the Month Ending May 31 (assumed data) | |||
Concentrate | 2-Liter Bottles | Carbonated Water | |
Materials required for production: | |||
Coke® | |||
Sprite® | |||
Total materials | |||
Direct materials unit price | x | x | x |
Total direct materials to be purchased |
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