Soda is the largest bottler of Soda in Western Europe. The company purchases Brand 1 and Brand 2 concentrate from The Soda Compa
ny, 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 at the Wakefield, UK, bottling plant is as follows for the month of May:col1 Brand 1 106,000 two-liter bottlescol2 Brand 2 81,000 two-liter bottlesIn addition, assume that the concentrate costs $79 per pound both Brand 1 and Brand 2 and is used at a rate of 0.1 pound per 100 liters of carbonated water in blending Brand 1 and 0.15 pound per 100 liters of carbonated water in blending Brand 2. Assume that two liters of carbonated water are used for each two-liter bottle of finished product. Assume further that two-liter bottles cost $0.08 per bottle and carbonated water costs $0.06 per liter.Prepare a direct materials purchases budget for May, assuming inventories are ignored, because there are no changes between beginning and ending inventories for concentrate, bottles, and carbonated water.
1 answer:
Answer and explanation:
<em>check the attached file for a well formatted answer</em>
The purchase budget for the month of Mar 2012 is asked. Also there are no changes in beginning and closing inventories. The data given is summarised as below,
Brand 1 Brand 2
Bottle size 2 lit 2 lit
Number of bottles 106000 81000
Concentrate cost $85 per pound
Concentrate used 0.15 lb per 100 lit 0.2 lb per 100 lit
Carbonated water used 2 lit 2 lit
Bottle cost $0.1 per bottle
Carbonated water cost $0.08 per litre
Based on this the budget is filled as below,
CONCENTRATE 2-LITRE BOTTLES CARBONATED WATER
Brand 1 (A)
318 lbs
[=106000*2/100*0.15 lbs]
106000 bottles
212000 litres
[106000 bottles * 2 litres]
Brand 2 (B)
324 lbs
[=81000*2/100*0.2 lbs]
81000 bottles
162000
[81000 bottles * 2 litres]
Total Materials (C=A+B) 642 lbs 187000 bottles 374000 litres
Direct materials unit price (D) $ 85 $ 0.1 $ 0.08
Total direct materials to be purchased (E=C*D) $54570 $18700 $29920
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Answer:
The government should decrease spending by $100 billion.
Explanation:
The potential output level of an economy is $5,000 billion.
The economy is operating at an output level of $5,400 billion.
We see that there is an inflationary gap of $400 billion as the economy is operating at an output level of $400 billion more than the potential output level.
The marginal propensity to consume is 0.75.
ΔY =
$400 billion =
ΔG =
ΔG = $100 billion