Direct Materials Purchases Budget

Coca-Cola Enterprisesis the largest bottler of Coca-Colain Western Europe. The company purchases Cokeand Spriteconcentrate from TheCoca-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 Wakefield, UK, bottling plant are as follows for the month of May:

In addition, assume that the concentrate costs $60 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 $0.12 per bottle and carbonated water costs $0.05 per liter.

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Hint(s)

Prepare a direct materials purchases budget for May 2014, assuming inventories are ignored, because there are no changes between beginning and ending inventories for concentrate, bottles, and carbonated water. When required, enter unit prices to the nearest cent.

Coca-Cola Enterprises-Wakefield Plant
Direct Materials Purchases Budget
For the Month Ending May 31, 2014 (assumed data)
Concentrate	2-Liter Bottles	Carbonated Water
Materials required for production:
Coke	lbs.	btls.	ltrs.
Sprite
Total materials	lbs.	btls.	ltrs.
Direct materials unit price	x $	x $	x $
Total direct materials to be purchased	$	$	$

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Remember to ignore inventory when calculating direct materials to be purchased. First you must calculate the production amount in liters in order to determine the concentrate pounds required for production.

Learning Objective 4.