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    Direct Materials Purchases budget for Soda Company

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    The Soda 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 Brand 1 and Brand 2 two-liter bottles are as follows for the month of March:

    Brand 1 37,000 two-liter bottles
    Brand 2 28,000 two-liter bottles

    In addition, assume that the concentrate costs $81 per pound for both Brand 1 and Brand 2 and is used at a rate of 0.2 pound per 100 liters of carbonated water in blending Brand 1 and 0.25 pound per 100 liters of carbonated water in blending Brand 2. Assume that two liter bottles cost $0.09 per bottle and carbonated water costs $0.07 per liter.

    Prepare a direct materials purchases budget for March 2010, assuming no changes between beginning and ending inventories for all three materials.

    SODA COMPANY
    Direct Materials Purchases Budget
    For the Month Ending MARCH 31, 2010
    (assumed data)
    Concentrate 2-Liter Bottles Carbonated Water
    Materials required for production:
    Brand 1 lbs. btls. ltrs.
    Brand 2 lbs. btls. ltrs.
    Total materials lbs. btls. ltrs.
    Direct materials unit price (Enter as dollars and cents.) $ $ $
    Total direct materials to be purchased $ $

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    Solution Summary

    Your tutorial is attached in Excel. I have a section for assumptions and costs, a computation of the materials needed for production, and a computation of purchases needed.

    $2.19

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