Comprehensive review of budgeting. (50-60 minutes) British Beverages bottles two soft drinks under licence to Cadbury Schweppes at its Manchester plant. Bottling at this plant is a highly repetitive, automated process. Empty bottles are removed from their carton, placed on a conveyor, and cleaned, rinsed, dried, filled, capped and heated (to reduce condensation). The only stock held is either direct materials or else finished goods. There is no work-in-progress.

The two soft drinks bottled by British Beverages are lemonade and diet lemonade. The syrup for both soft drinks is purchased from Cadbury Schweppes. Syrup for the regular brand contains a higher sugar content than the syrup for the diet brand.

British Beverages uses a lot size of 1,000 cases as the unit of analysis in its budgeting. (Each case contains 24 bottles.) Direct materials are expressed in terms of lots, where one lot of direct materials is the input necessary to yield one lot (1,000 cases) of beverage. In 2001, the following purchase prices are forecast for direct materials:

h. Hours of budgeted bottling time is the sole allocation base for all frxed manufacturing overhead.
i. Administration costs are forecast to be 10% of the cost of goods manufactured for 2001. Marketing costs are forecast to be 12% of euro sales for 2001. Distribution costs are forecast to be 8% of euro sales for 2001.

REQUIRED Assume British Beverages uses the first-in, first-out (FIFO) method for costing all stock. On the basis of the preceding data, prepare the following budgets for 2001:
Revenue budget (in euros)
Production budget (in units)
Direct materials usage budget Gn units and euros)
Direct materials purchases budget (in units and euros)
Direct manufacturing labour budget Manufacturing overhead costs budget Closing finished goods stock budget Cost of goods sold budget ae eet Marketing costs budget 10. Distribution costs budget 11. Administration costs budget 12. Budgeted profit and loss account. mlop9

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LEMONADE DIET LEMONADE Syrup EUR 1,200 per lot EUR 1,100 per lot Containers (bottles, caps, etc.) Packaging EUR 1,000 per lot EUR 1,000 per lot EUR 800 per lot EUR 800 per lot The two soft drinks are bottled using the same equipment. The equip- ment is cleaned daily, but it is only rinsed when a switch is made during the day between diet lemonade and lemonade. Diet lemonade is always bottled first each day to reduce the risk of sugar contamination. The only difference in the bottling process for the two soft drinks is the syrup. Summary data used in developing budgets for 2001 are as follows: