Dixson Beverages manufactures its own soda pop bottles. The bottles are made from polyethylene terephthalate $($PET$),$ a

lightweight yet strong plastic. Dixson uses as much PET recycled resin pellets in its bottles as it can, both because using

recycled PET helps Dixson to meet its sustainability goals and because recycled PET is less expensive than virgin PET.

$($Click the icon to view more information.$)$

Dixson's management is analyzing whether the change to the bottle molds to reduce PET plastic usage should be

made. Management expects the following number of soda bottles to be used in the upcoming year:

$($Click the icon to view the number of soda bottles.$)$

Read the requirements.

Requirement $1.$ Using the original data $($before any redesign of soda bottles$),$ prepare a direct materials budget to calculate the cost

Start by preparing the direct materials budget through the total quantity needed, then complete the budget.

Dixson Beverages

Direct Materials Budget

For quarters $1$ through $4$

Units to be produced

Multiply by: Quantity of direct materials needed per unit

Quantity of PET needed for production

Plus: $,$ Desired ending inventory

Total quantity needed

Less:

Beginning inventory of direct materials

Quantity to purchase

Multiply by: Cost per kilogram

Total cost of direct material purchases

Data table

For the upcoming year, management expects the beginning inventory of PET to be $3,840$ kilograms, while

ending inventory is expected to be $4,470$ kilograms. During the first three quarters of the year, management

wants to keep the ending inventory of PET at the end of each quarter equal to $30\%$ of the following quarter's

PET needs.

More info

Dixson is continuing to search for ways to reduce its costs and its impact on the

environment. PET plastic is melted and blown over soda bottle molds to produce

the bottles. One idea Dixson's engineers have suggested is to retrofit the

soda bottle molds and change the plastic formulation slightly so that $25\%$ less PET

plastic is used for each bottle. The average kilograms of PET per soda bottle

before any redesign is $0\mathrm{.}004kg.$ The cost of retrofitting the soda bottle molds will

result in a one$-$time charge of $$23,561,$ while the plastic reformulation will cause

the average cost per kilogram of PET plastic to change from $$3\mathrm{.}00$ to $$3\mathrm{.}30.$