Coca-Cola Enterprises is the largest bottler of Coca-Cola® in Western Europe. The company purchases Coke® and Sprite® concentrate from The Coca-Cola Company

Coca-Cola Enterprises is the largest bottler of Coca-Cola® in Western Europe. 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 Wakefield, UK, bottling plant are as follows for the month of May:

Coke 176,000 two-liter bottles
Sprite 112,000 two-liter bottles



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.

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.


Answer:





















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
® 528* lbs. 176,000 btls. 352,000 ltrs.
Sprite® 224* 112,000 224,000
Total materials 752 lbs. 288,000 btls. 576,000 ltrs.
Direct materials unit price × $60 × $0.12 × $0.05
Total direct materials to be
purchased $45,120 $34,560 $28,800
Coke® Sprite®
* Production in liters (bottles × 2 liters/bottle)…………………… $352,000 $224,000
Divide by 100…………………………………………………………… ÷ 100 ÷ 100
3,520 2,240
Multiply by concentrate pounds per 100 liters…………………… × 0.15 × 0.10
Concentrate pounds required for production…………………… 528 224